Mega-Project Engineering-Management Processes: Pre

School of Civil and Mechanical Engineering

Mega-Project Engineering-Management Processes:

Pre-Planning Phase Evaluation for Construction and Mining

Abdulaziz Ali M. Albishri

This Thesis is presented for the Degree of Doctor of Philosophy

of Curtin University

December 2015

ii

DECLARTION

The researcher confirm that this thesis is his own work and the best of his knowledge and

belief it contains no material previously submitted or published by any other person or to

any other university or educational institution except where due acknowledgement has

been made. This thesis contains no material which has been accepted for the award of any

other degree or diploma in any university.

Signature: Abdulaziz Ali M. Albishri

Date: 14/12/2015

iii

ABSTRACT

Mega-projects around the globe have encountered difficulties in delivery. Over-time, cost

overruns starting from the design phase, through start-up, the construction phase, and then

delivery have categorised mega-project progressions; delay stemming from the planning

phases and implementation during construction phase, are particularly problematic.

Project management professionals, industry practitioners, (alongside academia and

developers of software engineering tools) lack a holistic approach that requires starting

from the pre-planning phase; thus understanding of mega-projects’ project management

is incomplete. This research builds upon a qualitative research methodology for two case

studies, across two ‘operational’ subsidiaries owned by the KSA public cooperation

specialising in mining and infrastructure industry, which implement and manage their own

projects alongside multinational companies in the fields of project management, data

collection, planning, design, procurement, construction and operation. The research

methodology examined longitudinally in-depth face to face semi-structured interviews,

with a range of very senior mega-project client/executives and respective design and

construction stakeholders; data collection was supported by official approvals from the

CEOs’ of the two subsidiaries. Through initial cooperation analyses, this research study

recorded overruns across two megaprojects with regard to budget, time resources and

quality-vagaries during the preparation phase/ prefeasibility/ feasibility/ execution/ &

start-up phases, logging many uncertainties during the course of the project lifecycle

which caused many knock-on change-orders during the basic design/ detailed design/

procurement/ construction/ delivery and start-up phases. The main aim of this research

was to evaluate mega-project management processes applied at the preplanning, design,

iv

construction phases and design, to clarify the process and management approaches used

in order to recommend improvement to the process for future projects and to clear up/

reduce/ prevent project issues from derailing deadlines resulting in budget inaccuracies

beyond the preplanning phase. Findings reflect the activities of multinational companies

and higher management at respective pre-planning phases. These findings include the

impact of traditional project management, Stage-Gate Processes, Gate keeper approval,

scope change and change order, traditional contracting and tendering, design process and

evaluation, and finally the impact of software programs for data collection at preplanning

phase on project planning and cost estimation. Findings led to the development of a flow-

chart deliverable guide able to enhance traditional project management, address

appropriate Stage-Gate Processes, inform Gate-keeper approval, incorporate scope and

scope-change order variables, advise upon traditional contracting and tendering

applications, position applicably design processes and evaluation, and finally address the

impact of software programs for data collection at preplanning phase on project planning

and cost estimation. Recommendations for a best practice stakeholder guide have been

developed and are presented towards a project-management best-practice/ roadmap for

the preplanning stages of mega-project (activities and tasks) progression. An induction

program is highlighted as an essential stage in order to explain roadmap steps and to

emphasise the importance of processes generally, pre-empting optimum outcomes of each

stage for stakeholders and shareholders in order to reduce scope change/ scope creep

during mega-project lifecycles.

v

ACKNOWLEDGEMENT

In the name of Allah, the Entirely Merciful, the Especially Merciful. All praise is due to

Allah, Lord of the worlds; first of all, I would love to thank my honoured parents and

loving siblings who bestowed every possible care upon my education, and gave me hope,

strength and urged me to face the difficulties of life and to work hard with determination

in order to obtain knowledge, secure my future and to become an effective member in the

society.

It is an honour to thank Dr Andrew Whyte who has surrounded me with support and

encouragement. I also would love to thank Dr Joyce Bell who copyedited the thesis with

great skill and patience, gave good advice, insight and provided good follow-up.

I also would like to thank all of those who helped and supported me in the collection of

data used in the context of the research. Finally, I do not want to forget to thank all of

those named in the bibliography; they enrich this field of study with their efforts and

cooperation. They make it a very interesting field.

vi

LIST OF PUBLICATIONS

Albishri, A., and A. Whyte. 2016. “Mega-project roadmap process for project

management executives and stakeholders at the preplanning stages” under publication

process.

Albishri, A., and A. Whyte. 2016. “Megaproject progress; failure of mixed EPCM/EPC

between the scope creep and design, under publication process.

Albishri, A., and A. Whyte. 2013. “Research, Development, and Practice in Structural

Engineering and Construction.” In The 1st Australasia and South East Asia Conference in

Structural Engineering and Construction (ASEA-SEC-1), Nov 28, 2012, Perth, Western

Australia: Research Publishing Services

Albishri A, Whyte A, (2012), ‘Synthesis of Traditional Project Engineering Management

in Construction Projects with Agile Approaches Towards Efficiency Gains’, in Vanissorn

et al (Eds), Research, Dev. & Practice in Structural Eng. & Con., pps 921-926, ISBN-13

978-981-07-3677-4

http://espace.library.curtin.edu.au/R?func=dbin-jump-full&local_base=gen01-era02&object_id=188947

http://espace.library.curtin.edu.au/R?func=dbin-jump-full&local_base=gen01-era02&object_id=188947

vii

TABLE OF CONTENTS

ABSTRACT .................................................................................................................................. iii

ACKNOWLEDGEMENT ............................................................................................................. v

LIST OF PUBLICATIONS .......................................................................................................... vi

TABLE OF CONTENTS ............................................................................................................. vii

LIST OF FIGURES ..................................................................................................................... xii

LIST OF TABLES ...................................................................................................................... xiv

ABBRIVATIONS ....................................................................................................................... xvi

CHAPTER ONE .......................................................................................................................... 1

1 INTRODUCTION ................................................................................................................. 1

1.1 Background of the Study................................................................................................ 1

1.2 Statement of the Problem and Gap of Knowledge ......................................................... 1

1.2.1 Mega-Projects ........................................................................................................ 1

1.2.2 Mega-Project initiation phase ................................................................................ 3

1.2.3 Mega-Project management process........................................................................ 8

1.2.4 Issues in the managing of Mega-Projects............................................................. 10

1.2.5 Stage-gate project management process .............................................................. 12

1.2.6 Scope and scope changing for mega-projects ...................................................... 18

1.2.7 Scope changing and contract ................................................................................ 20

1.3 Research Aim, Objectives and Scope .......................................................................... 25

1.3.1 Research aim ........................................................................................................ 25

1.3.2 Research objective ............................................................................................... 25

1.4 Scope of the Research .................................................................................................. 28

1.5 Significance of the Study and Research Contributions ................................................ 28

1.5.1 Theoretical benefits .............................................................................................. 29

1.5.2 Benefits to industry .............................................................................................. 29

1.6 Research Approach and Design ................................................................................... 30

1.7 Thesis Overview .......................................................................................................... 31

1.8 Chapter Conclusion ...................................................................................................... 31

CHAPTER TWO ....................................................................................................................... 33

2 LITERATURE REVIEW .................................................................................................... 33

2.1 Introduction .................................................................................................................. 33

viii

2.2 Study Objective ............................................................................................................ 34

2.3 Study Questions ........................................................................................................... 34

2.4 Data Collection Methodology Approach ..................................................................... 35

2.5 Existing Research ......................................................................................................... 36

2.5.1 Mega-project cost overrun, delay of time and quality issues ............................... 36

2.5.2 Mega-project management approaches ................................................................ 41

2.5.3 Stage-Gate process ............................................................................................... 42

2.5.4 Scope, scope changing and scope creep for engineering projects ........................ 48

2.5.5 Scope development and contracts ........................................................................ 50

2.6 Chapter Conclusion ...................................................................................................... 54

CHAPTER THREE ................................................................................................................... 56

3 METHODOLOGY .............................................................................................................. 56

3.1 Introduction .................................................................................................................. 56

3.2 Purpose of Study .......................................................................................................... 56

3.3 Research Methodology ................................................................................................ 58

3.4 Quantitative Methodology ........................................................................................... 58

3.5 Advantages and disadvantages of quantitative methodology ...................................... 59

3.6 Qualitative Methodology ............................................................................................. 60

3.7 Advantages and disadvantages of qualitative methodology ........................................ 62

3.8 The advantages of qualitative research ........................................................................ 62

3.9 The disadvantages of qualitative research.................................................................... 65

3.10 Data Collection ............................................................................................................ 67

3.11 In-depth case study ...................................................................................................... 67

3.12 Advantages of case study ............................................................................................. 69

3.13 In-depth interview ........................................................................................................ 71

3.14 The advantages of interview ........................................................................................ 72

3.15 Interviewee ................................................................................................................... 75

3.16 Document Analysis ...................................................................................................... 77

3.17 Validity ........................................................................................................................ 79

3.18 Ethical Conduct in Research ........................................................................................ 83

3.19 Ethical issues ................................................................................................................ 83

3.20 Chapter conclusion ....................................................................................................... 84

CHAPTER FOUR ...................................................................................................................... 85

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4 INTERVIEW ANALYSIS ................................................................................................... 85

4.1 Interviewee Details ...................................................................................................... 85

4.2 Interviewee Question and Response ............................................................................ 87

4.2.1 Traditional project management and stage-gate processes .................................. 87

4.2.2 Mega-project scope of work and scope creep ...................................................... 88

4.2.3 Contract strategy and award mechanism .............................................................. 90

4.2.4 Basic engineering design and detailed engineering design phases ...................... 93

4.2.5 Software and tools at the project early stages ...................................................... 95

4.2.6 Value engineering or value management at the design stage ............................... 96

4.2.7 Mega-engineering project; cost estimation .......................................................... 97

4.2.8 Mega-engineering projects; function analysis ..................................................... 99

4.2.9 Mega-engineering project; team during conceptual or initiation phase ............. 100

4.2.10 Mega-engineering project; market condition and external factors ..................... 102

4.2.11 Mega-engineering project; location and logistics .............................................. 103

4.2.12 Mega-engineering project; linguistic diverse and internal culture ..................... 104

4.2.13 Mega-engineering project in the mining field .................................................... 105

4.2.14 Mega-engineering projects; leadership .............................................................. 106

4.3 Summary of Interviewee Questions and Responses .................................................. 107

4.4 Analysis of Responses ............................................................................................... 121

4.4.1 The definition of mega engineering project in the mining field at the early stage

…………............................................................................................................................ 121

4.4.1.1 Gold subsidiary responses to the definition of mega engineering project ............. 121

4.4.1.2 Aluminium subsidiary responses to the definition of mega engineering

project……………. ............................................................................................................... 122

4.4.1.3 Headquarter’s (business unit) responses to he definition of mega engineering

project…….. .......................................................................................................................... 123

4.4.2 Traditional project management process and stage-gate process at early

phase……………. ............................................................................................................. 124

4.4.2.1 Gold subsidiary responses to traditional PM process & stage-gate process .......... 124

4.4.2.2 Aluminium subsidiary responses to traditional PM process and stage-gate

process…….…..............................................................................................………………..127

4.4.2.3 Headquarter’s (business unit) responses to traditional PM process and stage-gate

process…. .............................................................................................................................. 128

4.4.3 The mega-projects scope of work and scope creep ............................................ 130

x

4.4.3.1 Gold subsidiary responses to project scope creep .................................................. 130

4.4.3.2 Aluminium subsidiary responses to project scope creep ....................................... 132

4.4.3.3 Headquarter’s (Business unit) responses to project scope creep ............................ 135

4.4.4 The Contract strategy and award mechanism .................................................... 137

4.4.4.1 Gold subsidiary responses to contract award mechanism and strategy ................. 137

4.4.4.2 Aluminium subsidiary responses to contract award mechanism and strategy ....... 139

4.4.4.3 Headquarter’s (Business unit) responses to contract award mechanism and

strategy…………. .................................................................................................................. 141

4.4.5 The basic engineering design and detailed engineering design phases .............. 142

4.4.5.1 Gold subsidiary responses to basic and detailed engineering design ..................... 142

4.4.5.2 Aluminium subsidiary responses to basic and detailed engineering design .......... 144

4.4.5.3 Headquarter’s (Business unit) responses to basic and detailed engineering

design………… ..................................................................................................................... 146

4.4.6 Software and tools at the mega-project early stages .......................................... 147

4.4.6.1 Gold subsidiary responses to mega-project software programs ............................. 147

4.4.6.2 Aluminium subsidiary responses to mega-project software programs .................. 148

4.4.6.3 Headquarter’s (Business unit) responses to mega-project software programs ....... 149

4.4.7 Value engineering or value management at the prefeasibility and feasibility

phases…… ......................................................................................................................... 150

4.4.7.1 Gold subsidiary responses to value engineering or value management ................. 150

4.4.7.2 Aluminium subsidiary responses to value engineering or value management ...... 151

4.4.7.3 Headquarter’s responses to value engineering or value management .................... 152

4.4.8 Mega engineering project cost estimation .......................................................... 152

4.4.8.1 Gold subsidiary responses to mega-project cost estimation................................... 152

4.4.8.2 Aluminium subsidiary responses to mega-project cost estimation ........................ 153

4.4.8.3 Headquarter’s responses to mega-project cost estimation ..................................... 154

4.4.9 Mega engineering projects: function analysis .................................................... 155

4.4.9.1 Gold subsidiary responses to how function analysis had been used at the early stages

of the project cycle ................................................................................................................. 155

4.4.9.2 Aluminium subsidiary responses to function analysis at the early stages of the

project cycle ........................................................................................................................... 156

4.4.10 Mega engineering project team during conceptual or initiation phase .............. 156

4.4.10.1 Gold subsidiary responses regarding efficiency of the mega-project team at the

early phases ………………………………………………………………………………….156

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4.4.10.2 Aluminium subsidiary responses regarding efficiency of the mega-project team at

the early phases

………………………………………………………………………………….157

4.4.10.3 Headquarter’s responses with regard to efficiency of the mega-project team at the

early phases…….. .................................................................................................................. 158

4.4.11 Mega engineering project: market condition and external factors affecting the

mega-project….. ................................................................................................................ 159

4.4.11.1 Gold subsidiary responses to market conditions and external factors affecting the

project……. ........................................................................................................................... 159

4.4.11.2 Aluminium subsidiary responses to market conditions and external factors

affecting the project……. ...................................................................................................... 160

4.4.11.3 Headquarter’s responses to market conditions and external factors affecting the

project………. ....................................................................................................................... 161

4.4.12 Mega engineering project: location and logistics ............................................... 162

4.4.12.1 Gold subsidiary responses to mega-project location and logistics at the conception

phase……… .......................................................................................................................... 162

4.4.12.2 Aluminium subsidiary responses to mega-project location and logistics .......... 162

4.4.12.3 Headquarter’s responses to mega-project location and logistics ....................... 164

4.4.13 The mega engineering project: the impacts of linguistic diversity and internal

culture…. ........................................................................................................................... 164

4.4.13.1 Gold subsidiary responses to the impact of linguistic diversity and internal

culture………………………………………………………………………………………..164

4.4.13.2 Aluminium subsidiary responses to the impact of linguistic diversity linguistic

divers and internal culture ...................................................................................................... 165

4.4.13.3 Headquarter’s responses to the impact of linguistic diversity linguistic divers and

internal culture ....................................................................................................................... 166

4.4.14 Mega engineering projects: impact of leadership: board members, higher

management and the company management...................................................................... 167

4.4.14.1 Gold subsidiary responses to the impact of leadership on the project progress . 167

4.4.14.2 Aluminium subsidiary responses to the impact of project leadership on the project

progress…… .......................................................................................................................... 168

4.4.14.3 Headquarter’s responses to the impact of project leadership on the project

progress…… .......................................................................................................................... 168

CHAPTER FIVE ..................................................................................................................... 171

5 DISCUSSION .................................................................................................................... 171

5.1 Introduction ................................................................................................................ 171

2.5 Impacts of Stage-Gate Process on Project Lifecycle ................................................. 173

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5.3 Impacts of Megaproject Definition at the Preplanning Phase on Project Lifecycle .. 179

5.4 Impacts of Scope of Work and Scope Creep ............................................................. 183

5.5 Impacts of Contracting and Tendering ....................................................................... 185

5.6 Impacts of Design ...................................................................................................... 188

5.7 Impacts of Software Programs on Project at Preplanning and Conception Phases.... 191

5.8 Alignment of Research Objectives with Findings ..................................................... 192

5.9 Weaknesses of the Research ...................................................................................... 193

5.10 Strength of the Research ............................................................................................ 224

5.11 Chapter Conclusion .................................................................................................... 225

CHAPTER SIX ........................................................................................................................ 227

6 STUDY OUTCOME: MEGA-PROJECT PREPLANNING PHASE ROAD MAP ......... 227

6.1 Introduction ................................................................................................................ 227

6.2 Megaproject Procedure Starting from Project Development Phase ........................... 228

6.3 Mega-Project Preplanning Process Activities and Tasks ........................................... 228

6.3.1 The mega-project roadmap ................................................................................ 232

6.3.2 First vertical phase and first stage ...................................................................... 233

6.3.3 Stages of prefeasibility phase ............................................................................. 234

6.3.4 The business processes ....................................................................................... 235

6.3.5 Second vertical phase and second stage ............................................................. 237

6.3.6 Stages of feasibility phase .................................................................................. 238

6.3.7 The work processes ............................................................................................ 238

6.4 Roadmap for Mega project development process (Preplanning phase) ..................... 239

CHAPTER SEVEN .................................................................................................................. 241

7 CONCLUSION AND RECOMMENDATIONS ............................................................... 241

7.1 Conclusions ................................................................................................................ 241

7.2 Recommendations Derived From This Research ....................................................... 243

CHAPTER EIGHT .................................................................................................................. 247

8 REFERENCES ................................................................................................................. 247

APPENDIX A ........................................................................................................................... 258

xiii

LIST OF FIGURES

Figure 1.1: Mega-project execution cycle by using LSTK contract ............................................... 7

Figure 1.2: Stages-and Gates of Stage-Gate process .................................................................... 14

Figure 1.3: Industrial basic Stage-Gate process ............................................................................ 16

Figure 1.4: Theoretical Stage-Gate planning process at preplanning phase ................................. 17

Figure 1.5: The difference between industrial mega-project contracts ......................................... 23

Figure 1.6: Contract and cost control for Mega-project ................................................................ 24

Figure 3.1: Breadth vs. depth in question-based studies ............................................................... 73

Figure 4.1: Gold company difficulties during design phases and stage-gate process ................. 126

Figure 4.2: Aluminum Co. difficulties during design phases & Stage-Gate process .................. 127

Figure 4.3: Higher management views of Stage-Gate process & TPM ...................................... 129

Figure 4.4: Reasons of scope creep in the gold mining company projects ................................. 131

Figure 4.5: Reasons of scope creep in mining aluminum company projects .............................. 134

Figure 4.6: Reasons of scope creep from the perspective of higher management ...................... 136

Figure 4.7: Ineffectiveness of contract award mechanism & strategy in gold Co. ..................... 138

Figure 4.8: Ineffectiveness of contract award mechanism & strategy in Aluminum Co ............ 140

Figure 4.9: The difficulties during the design phases or FEED – Gold Co ................................ 144

Figure 4.10: The difficulties during the design stages or FEED – Aluminum Co ...................... 146

Figure 6.1: Two megaproject vertical phases (Hybrid stage-gate process) ............................. 233

Figure 6.2: Horizontal stages for pre-feasibility and feasibility phases ...................................... 233

Figure 6.3: First vertical phase and first stage of project definition ........................................... 234

Figure 6.4: Stages of prefeasibility phase (Business process phase) .......................................... 234

Figure 6.5: Second vertical phase and second stage of project definition .................................. 237

Figure 6.6: Stages of feasibility phase ........................................................................................ 238

Figure 6.7: Roadmap for Mega project development process (Preplanning phase) ................... 240

xiv

LIST OF TABLES

Table 1.1: The difference between PMBOK and PRINCE2 processes .......................................... 4

Table 1.2: The difference between PMBOK and PRINCE2 methodologies .................................. 5

Table 1.3: The differences between the two methodologies in the initiation phase for scope of

work ................................................................................................................................................ 5

Table 1.4: Methodologies of project management for different tasks ............................................ 6

Table 1.5: Stage-Gate lifecycle and Gate-Keepers in current industrial project ........................... 14

Table 1.6: Current industrial phases and name of each phase and cost ........................................ 15

Table 1.7: Steps of successful scoping for big scale projects ....................................................... 19

Table 1.8: sesearch objectives and methodology approaches ...................................................... 26

Table 2.1: The 20 main key risks that influence project objectives .............................................. 40

Table 2.2: Internal and external factors affect the estimate in preplanning phase ........................ 49

Table 2.3: Contract issues related to causes of construction phase delay ..................................... 51

Table 3.1: Quantitative methodology distinguishing characteristics ............................................ 59

Table 3.2: Qualitative methodology distinguishing characteristics .............................................. 62

Table 3.3: Project team of gold subsidiary ................................................................................... 76

Table 3.4: Project team of aluminium subsidiary ......................................................................... 76

Table 3.5: Higher management interviewees at the headquarters ................................................. 77

Table 3.6: The procedures supported by the authorities ............................................................... 78

Table 3.7: Summary of strategies to validate research ................................................................. 82

Table 4.1: Project team of gold subsidiary ................................................................................... 85

Table 4.2: Project team of aluminium subsidiary ......................................................................... 86

Table 4.3: Higher management interviewees at the headquarters ................................................. 86

Table 4.4: Responses to traditional project management and stage-gate processes ..................... 87

Table 4.5: Responses to Mega-project scope of work and scope creep ........................................ 88

Table 4.6: Responses to contract strategy and award mechanism ................................................ 90

Table 4.7: Responses to basic engineering design & detailed engineering design phases ........... 93

Table 4.8: Responses to software and tools at the project early stages ......................................... 95

Table 4.9: Responses to value engineering or value management at the design stage ................. 96

Table 4.10: Responses to Mega-engineering project; cost estimation .......................................... 97

Table 4.11: Responses to Mega-engineering project; function analysis ....................................... 99

Table 4.12: Responses to Mega-engineering project; team during conceptual or initiation

phase ........................................................................................................................................... 100

Table 4.13: Responses to Mega-engineering project; market condition & external factors ....... 102

Table 4.14: Responses to Mega-engineering project; location and logistics .............................. 103

Table 4.15: sesponses to Mega-engineering project; linguistic diverse & internal culture ....... 104

Table 4.16: sesponses to Mega- engineering project in the mining field .................................... 105

Table 4.17: sesponses to Mega-engineering project; leadership ................................................ 106

Table 4.18: Interviewee question and response from QI to Q4 .................................................. 108

Table 4.19: Interviewee question and response from Q05 to Q11 .............................................. 109




xv









Table 5.1: Align objectives with the findings ........................................................................... 193

Table 6.1: Mega-project preparation & associated tasks/activities at preplanning phase ........... 228

Table 6.2: Roadmap workflow process icons ............................................................................. 232

xvi

ABBRIVATIONS

ARAMCO: ARabian AMerican oil Company

CCC: the Care, Custody and Control of site

CCPaceS: CC Pace Systems

CEO: Chief Executive Officer

CII: The Construction Industry Institute

CP: Closing Process

CS3: Capturing Project lssues

CS4: Examining Project lssues

CS5: Reviewing Stage Status

CS8: Escalating Project Issues

DP3: Directing Project3



EA: Enterprise Architect

ECM: Engineering, Construction, Management

EPC: Engineering Procurement Construction

EPCM: Engineering Procurement Construction Management

ESH: Environmental, health and safety

EVA: Earned Value Analysis

FEED: Front-End Engineering and Design

FEL1: Front-End loading1



HAZOP: HAzard and OPerability study

HV: High Voltage

I/O: Input and Output of control system

IRR: Internal Rate of Return

xvii

ITT: International Telephone & Telegraph Co.

IT: Information Technology

KSA: Kingdom of Saudi Arabia

LV: Low Voltage for transformers substations

LSTK: Lump Sum Turnkey

LNG: Liquefied Natural Gas

MCC: Motor Control Centre

MENA: Middle East and North Africa

MTO: Material Take off

MV: Medium Voltage for transformers substations

NASA: The National Aeronautics and Space Administration

NCHRP: National Cooperative Highway Research Program

NPV: Net Present Value

OECD: Organization for Economic Cooperation and Development

OOM: Order of Magnitude Estimates

P&G: Procter & Gamble Co.

PBS: Project Breakdown Structure

PDRI1: Project Definition Rating Index 1


PDRI2i: Project Definition Rating Index 2i


PFD: Project Flow Diagram

PID: Project Initiation Documentation

PMBOK: Project Management Body of Knowledge

PMI: Project Management Institute

PMP: Project Management Professional

PRINCE2: PRrojects IN Controlled Environments, version 2

PV: Project Value

xviii

PV: Present Val

QA: Quality assurance

QC: Quality Control

QRA: Quantitative Risk Analysis

RM1: Risk Management Study 1




ROI: Return On Investment

SABIC: Saudi Arabia Basic Industries Corporation

SB: Managing Stage Boundaries

SIL: Safety Integrity Level

UK: United Kingdom of Great Britain

US: United States of America

VE: Value Engineering

VIP1: Value Improvement Practice 1



VP: Vice President

WA: Western Australia

WBS: Work Breakdown Structure

1

CHAPTER ONE

1 INTRODUCTION

1.1 Background of the Study

The level of mega-project instigation and implementation globally of mining projects has

accelerated dramatically in the last ten years; these large scale projects represent

infrastructure ventures such as dams, transport facilities, nuclear power plants, mining,

and oil and gas exploration. An example of the scale and technical requirement of such

mega-projects is illustrated by the recent consortium of 6 multinational companies

engaged to realise the $43 billion Liquefied Natural Gas (LNG) project in Gorgon in rural

Western Australia (WA). Other examples of mega-projects are exemplified by projects

such as the Germany-Italy rail route across the Alpine Mountains, as well as the $50

billion project between the USA and Russia to improve access across the Bering Strait.

McKinsey and Co., a multinational management consulting firm, found that 85% of mega-

projects around the world exceed budgets and schedules (Rocca 2015).

1.2 Statement of the Problem and Gap of Knowledge

1.2.1 Mega-Projects

Many research studies have focussed on determining the factors affecting scope, quality,

time and cost of mega-engineering projects. While there is no standard definition for a

mega-project (Brunn 2011), planners and scholars have agreed to define Mega-projects or

large scale engineering projects as any activity that has direct or indirect impact on the

community, environment and budget and can be stated in monetary terms as being in

2

excess of $1 billion of investment (Merrow 2011). Mega-projects are sometimes also

called ‘major programs’ and as a general rule of thumb, ‘mega-projects’ are measured in

billions of dollars, ‘major projects’ in hundreds of millions, and ‘projects’ in millions and

tens of millions (Flyvbjerg 2014, 6). Mega-projects are inherently risky due to long

planning and complex interferences (Flyvbjerg 2006). It has been found that mega-

projects have often significant challenges. Flyvbjerg (2014) listed 33 large scale

engineering projects that have a history of cost and time overrun, an early example of

which was the Sydney Opera House. High profile mega-project examples can be found

across a wide range of activities not least in space exploration projects where mega-project

ventures carry huge degrees of risk in their requirement for the interaction and the

effective integration of several thousand work items, any of which can result in knock-on

failure; according to NASA (1986) the loss of the space shuttle Challenger was caused by

a failure in the joint between the two lower segments of a motor. Hence maintaining and

controlling the scope of work and subtasks deliverables should be subject to agreed quality

standards at the early phases of the project.

The level of mega-project instigation and implementation has accelerated dramatically in

the twenty-first century between parties that are bound nationally and very often

internationally. Between 2013 and projecting into 2030, the market of all mega-project

fields is potentially between US$6 and US$9 trillion per year or 8% of the total global

gross domestic product(s) (Flyvbjerg 2014). In 2012 spending on industrial mega-projects

was expected to be at a rate of $200 billion outside of China, excluding the power

generation sector (Merrow 2011). The Middle East is one particular region currently

experiencing a growth in large scale infrastructure and engineering mega- projects;

opportunities exist, as a result of mega-project growth, to assess the extent to which

3

traditional project management methodologies, systems, processes, approaches and tools

might seek to enhance the realisation of projects’ preplanning phase(s) in the growth area

of the Middle East. The balance of the key factors of scope, quality, cost and time have

been recorded by many (as above) to be less than optimum of late; thus more advanced

review and (re)development of project management techniques to plan and control and

measure quality/cost/time is required to cope (better) with the seemingly constant

flexibility and change in the projects’ scopes-of-works.

1.2.2 Mega-Project initiation phase

Front-end planning is necessary before deciding to start a project or stop it (Williams and

Samset 2010). The Project Management Body of Knowledge /PMBOK Guide (PMBOK,

2013) defines an initiation as authorising the project, phases, activities and tasks. Like any

traditional engineering project management, mega-projects have the same concepts and

characteristics; the only thing that differs, theoretically, is the size of the project. However

the role of the front-end phase in ensuring project success is particularly crucial in mega-

projects (Merrow 2011; Morris 2013). In general the theoretical conception phase or

process usually covers the business case, scope of work, objectives, deliverables,

resources, milestone plan, cost estimation, risks issues, quality and dependences (Haughey

2010), upon which may be imposed a methodology as an essential set of guidelines or

principles that can be tailored to a specific situation (Wideman 2005). There are two main

traditional project management methodologies, one of which is (by) the project

management institution (PMI) as standard for the American government and American

companies, whilst another is PRINCE2 (an acronym for PRojects IN Controlled

Environments as a de facto process-based method for effective project management, used

4

extensively by the UK Government). PRINCE2 is widely recognised and used in the

private sector, both in the UK and internationally.

PMI was created in 1969 by the Institution of Project Management in order to guide

project manager to carry out a successful project and divide the project lifecycle into five

phases or processes (PMI 2008). PRINCE2 was created in 1989 by the Central Computer

and Telecommunications Agency UK and consisted of 8 phases or processes (as below).

Table 1.1: The difference between PMBOK and PRINCE2 processes

PMBOK

PRINCE2

1- Initiating 1- Starting Up

2- Directing

2- Planning 3- Initiating

4- Planning

3- Executing 5- Controlling a Stage

6- Managing Product

Delivery

4- Controlling 6- Managing Product

Delivery

7- Directing

5- Closing 8- Closing

Source: Adapted from (Matos and Eurico , PRINCE2 or PMBOK–a question of choice 2013)

While PMBOK identified the project definition as a temporary endeavour undertaken to

create a product, service or result, PRINCE2 identified the project definition as a

management environment created for the purpose of delivering one or more business

products according to a specified business case. Table 1.2 shows the differences between

5

the two theoretical methodologies PMBOK and PRINCE2 Methodologies (source: Lopes

and Matosa 2013).

Table 1.2: The difference between PMBOK and PRINCE2 methodologies

PMBOK PRINCE2

Standard Method

Descriptive Methodology Prescriptive Methodology

Process based Product based

Source: Adapted from (Matos and Eurico , Prince2 or PMBOK–a question of choice 2013)

Table 1.3 shows the differences between the two theoretical methodologies in the

conception phase for scope of work (W. H. Thomas 2014).

Table 1.3: The differences between the two methodologies in the initiation phase for scope of work

PMBOK PRINCE2 Comments

Initiation

Initiation is taken as the initiation of a project or the

authorization to continue into

the next phase. It mentions tools and techniques, such as

project selection methods,

benefit measurement methods mathematical methods and

expert judgment –no specific

method is offered, just a list of

possible sources. The output is

a Project Charter.

PRINCE2 tackles this in three areas, project initiation, Managing

Stage Boundaries and Directing a

Project. Project selection methods equate to the PRINCE2 Project

Approach, benefit measurement

would be found in the PRINCE2 Business Case and the list of those

offering expert judgment would be

available to any pm method. The

project initiation documentation

PID equates to the Project Charter,

but is wider in scope, e.g. identifying the whole project

management team, not just the

Project Manager, including the Project Plan, Business Case, risk

evaluation and controls.

PMBOK talks of a Product Description as input to

initiation, but this is not the

same as a PRINCE2 Product Description. It covers the

product characteristics, the

relationship between the product and the business need,

and the ‘form and substance’ of

the product description may

vary.

Project Scope

Management

PMI covers the scoping of a

project or phase and

controlling any changes to that scope.

PRINCE2 covers scoping in both

the PID and Work Package.

The PMBOK states that this

will cover the tools and

techniques required, but the only one covered in any detail

is the WBS, and there is no effort to continue from that

planning point into the other

techniques needed to actually produce a plan

Scope planning This covers the ‘progressive elaboration’ of project scope.

The inputs are the Product

Description, the Project Charter and the initial

definition of constraints and

assumptions. The outputs are the Scope Statement and

Scope Management Plan. The

latter describes how scope change will be managed and

includes an assessment of the

expected stability of the project (how likely to change,

PRINCE2 has this as part of the PID, being Problem Definition.

The management of scope change

is dealt with in PRINCE2 by change control, whose method is

described as part of the Project

Quality Plan in the PID. In PRINCE2 an assessment during

initiation of the volume of change

expected leads to consideration of a Change Authority and Change

Budget.

This comes after the Project Charter, whereas PRINCE2

makes it part of the information

needed before authorizing the project. One of the tools

mentioned by the PMBOK is

benefit /cost analysis, although there is no specific output of a

Business Case. PMBOK does

not enlarge upon the scope management plan to discuss

what to do if the assessment

shows a large volume of expected changes.

6

how frequently and how

much)

Scope definition This is the subdivision of the

major project deliverables into smaller, more manageable

components. The outputs are

work breakdown structures. PMBOK offers three example

templates covering an aircraft

system, a software product release and a wastewater

treatment plan. The process

stops at ‘decide if adequate cost and duration estimates

can be developed at this level of detail for each deliverable.’

This equates to part of the

PRINCE2 Product -based Planning technique, the Product

Breakdown Structure, without the

quality aspect of writing Product Descriptions or the transfer of the

products into a Product Flow

Diagram. The Planning process contains much more detail in

taking the Product Breakdown

Structure through the Product Flow Diagram, estimating,

scheduling, risk assessment and writing a narrative.

When describing other types of

WBS, PMBOK refers to a PBS, meaning a Project

Breakdown Structure, as being

‘fundamentally the same as a properly done WBS’.

Scope verification This is described as ‘the

process of obtaining formal

acceptance of the project

scope by the stakeholders’. It refers to the acceptance of the

work results, i.e. occurs at the

end of a project, rather than agreement at the end of

initiation on what is to be done

This is dealt with in more depth by

the CP and DP5 processes.

PMBOK only has formal

acceptance as an output.

There is no mention in the

PMBOK process of an End

Project Report or a Post Project

Review Plan.

Scope change

control

This is a very high level view

of the need for change control, agreeing and managing scope

change.

PRINCE2 has both a change

control component, a change control technique, processes (CS3

and CS4) to capture and analyse

change requests and a series of processes to obtain decisions on

changes and manage their

implementation (CS5, CS8, Exception Report, DP4, SB6,

Exception Plan and DP3 –Project

Board decision on a revised plan)

Both methods include noting

lessons learned from changes and setting a new baseline.

Source: Thomas (2014)

All-told there are estimated to be approximately 150 project management methodologies

(Gonzalez 2010). Table 1.4 shows different methodologies in different fields of project

management and how each methodology is deemed to be not fully effective.

Table 1.4: Methodologies of project management for different tasks

Guidelines PMBOK Agile CCPM

Heavy Management Control YES NO YES

Multitasking allowed YES YES NO

Expert Team Oriented NO YES NO

Open Status Reporting NO YES NO

Continuous Changing Processes NO YES NO

Heavy Risk Management YES NO YES

Hierarchical Structure YES NO YES

Phase Organization YES NO YES

Source: Known project management methodologies Perrin (2008), (CCPaceS 2015) and (PMBOK 2008)

7

The average study time for (mega) initiation phase or project development phase is 3 years

with the total installed cost of facility equal to 1% to 3%, while the implementation phase

may be as much as 5 years (Berends 2007). According to the largest oil producing

company in the world, ‘Saudi Aramco’, the industrial mega-project engineering

implementation cycle takes five years to become a reality. However, five to eight months

is the time for funding cycle, bid period, evaluation and award review. This cycle (Fig

1.1) applies when there’s competent project supervision and management of a company’s

own projects, with full potential to deal with major EPC firms, international vendors for

engineered equipment and local/international construction firms; Mega engineering

projects success factors are somewhat implicitly centred on final profitability (Fig 1.1).

Figure 1.1: Mega-project execution cycle by using LSTK contract. Source: Aramco internal project

management standard (2011)

During Front-End-Loading study phase-1, FEL1 and FEL2 or the study phase, the master

schedule and milestone schedule are prepared; they cover conceptual design, financial

evaluation, budget estimation and contracting strategy. The second stage of the project,

FEL3 or project proposal stage, covers milestone schedule and project summary schedule

which, in turn, cover definitive scope, estimating tools, expenditure estimation, pro-forma

contract, value engineering evaluation, material novation and continuous engineering. The

third stage, the project execution and control stage, is needed for project summary and

8

contractor schedule to cover contracts/purchase order, cost and schedule control,

construction and pre- commission list, project change request, management reporting and

performance monitoring.

1.2.3 Mega-Project management process

Mega-projects can be defined broadly as any activity that has direct or indirect impact on

the community, environment and budget and can be stated in monetary terms as being in

excess of $1 billion of investment (Altshuler and Luberoff 2003). Again as alluded to

above, like any engineering project, mega-projects have the same concepts and

characteristics;

It is noted that PMI and PRINCE2 are two main approaches used to manage projects.

While the PRINCE2 divides the basic project process into eight; starting up a project,

directing a project, start-up planning, directing the planning, controlling executing,

managing product delivery for executing and controlling and finally closing a project, PMI

divides the basic project process into five processes; initiation process, planning process,

executing process, monitoring and controlling process, and closing process.

Regardless of the methodology and terminology used, (mega) project management in

different industry fields uses the same basic process or concept. Ende and Marrewijk,

(2013) stated that a mega-project’s process contains project phase transitions and

milestones which connect, by providing spatial and temporal platforms, the interests of

project actors, interest groups and constructors. According to PMBOK, during the (mega)

project initiation phase, the project team tries to answer the question, "What are we trying

to do?" in order to consider the business case, scope and deliverables, objectives,

resources needed, milestone plan and timeline, cost estimate, risks and issues.

9

Large scale (mega) projects usually involve firms from different countries and engineering

fields including contractors, suppliers and fabricators. Some companies use the PM

process, others use the PRINCE2 process and yet others improve their own process. Kelly,

Ledwith and Turner (2010) stated that the nature of small and medium companies’ project

management is different from the traditional forms of larger companies’ project

management. They stated that small and medium companies often encounter difficulties

with scope of work.

Whyte (2014) found that the project deficiencies are very much a factor of ‘process’ and

‘leadership’ - 43% and 38% respectively; unknown internal factors and unknown external

factors deemed to contribute 11% and 5% respectively. The Construction Industry

Institute (2015) suggests that a sound process at the initiation phase or pre-planning phase

can reduce project cost by 20%, decrease overall project schedule and better meet project

goals. Morris (2011,7) stated ‘It is evident from an extensive amount of research that

management of the front-end definitional stages of projects is of overwhelming

importance to their ultimate outcome, yet we have little empirical data to suggest how best

management competencies here should be improved’.

Gibson and Hamilton (1994) studied 53 capital facility projects and found that a high level

of project preplanning can save 20% of project cost and 39% of project time. They

concluded that success of project lifecycle phases depends on scope definition at the

preplanning phase. It might be argued that improvement of mega-project performance in

the construction and engineering fields might begin at the preplanning phase and

specifically scope-passing between detailed plans that incorporate flexibility or agility in

implementation; before that, however, comes selection of an appropriate project

management process to facilitate the daily communication among the project key players.

10

1.2.4 Issues in the managing of Mega-Projects

The larger the size of the project, (anecdotally) the more it needs experienced project

management and construction firms with the ability to handle different engineering

disciplines to carry out multi-tasks and to minimize the change order and scope-change.

The larger the size of the mega-project, the more it needs precise coordination of the

resources and tasks. The clarity of project objectives and how to achieve them are the

principle project requirements that need to be delivered to the stakeholders. The length of

preplanning and implementation periods of (mega) projects drains budget, time and efforts

and leads to continuous change of project scope, for example as a result of design

deficiencies. However, the average study time for (mega) initiation phase or project

development phase, as mentioned above is, 3 years with the total installed cost of facility

equal to 1% to 3%, while the implementation phase may be as much as 5 years (Berends

2007). Therefore, when the cost of change increases during the project phases, the

opportunity for the decision makers to influence and change the scope of work of tasks

and activities becomes less because the budget has already been assigned. Scope then

becomes important.

The Project Management Institute (PMI) defines scope as ‘work that needs to be

accomplished to deliver a product, service, or result with the specified features and

functions’ (PMBOK guide, 104). Scope is work oriented to using questions that begin

with how the work will be done and how costs and schedules will be managed. Scope-

change is a status inherent in all projects, generally, and in particular large scale multi-

disciplinary mega-projects from pre-planning to delivery and start-up phases due to the

high degree of specialist input and need for expert consultations, and this leads to the need

for effective coordination and control and sound technical and non-technical input across

11

all project stakeholders. Cho and Gibson (2001) found that poor definition of project scope

by owner and contractor organizations led to poor project design and was considered as

one of the main causes of project failure.

Ramabodu and Verster (2013) identified critical factors that cause cost overruns in

projects as changes in scope of work, incomplete design at the time of tender, additional

works, lack of cost planning and monitoring of funds, contractual extension time and

delays in costing variations. Lawrence (2008) found that a cost estimator prepares cost

estimation report based on the scope of work documents at the preplanning phase and any

undefined tasks and activities will carry greater risk than clearly defined tasks and

activities. He found that the decision maker needs a good knowledge of the scope

definition or alternative ways to measure the scope definition.

Another study related to the issue of scope change was conducted by Zou et al. (2007) and

identified factors that influence project delivery: inadequate program scheduling,

unsuitable program planning, tight project schedule, incomplete documents and approval,

design variations, excessive approval procedures in administrative government

departments. In 2008 the Australian Constructors Association and Black Dawson

commercial law firm published a report with the finding that, with regard to public and

private Australian construction and infrastructure projects ‘the industry practice in relation

to the scoping of big scale projects was often seriously inadequate’ (p.4) and they added

that ‘managing parties’ disputes related to scoping after signing the contract is an issue’

(p.32).

The measurement and monitoring of quality, cost and time, the key factors of project

management, are made increasingly difficult by seemingly constant changes in the general

scope-of-works and related deviations from the initial brief; mega-project variation-

12

tracking creates huge complications despite a raft of contract clauses seeking to regulate

explicit extensions related to a scope change (Whyte 2014). The Construction Industry

Institute (2015) stressed the importance of understanding and embracing the pre-planning

process by owners and industry participants. Therefore, it is clear that scope is still a major

issue in engineering project management especially when there is no change control in the

project. Beyond scope, stage remains of interest.

1.2.5 Stage-gate project management process

Most of the multinational engineering corporations have different approaches toward

executing megaprojects. While some follow the American engineering process and

standards, PMI, others use the British way, PRINCE2 to implement the projects; problems

occur when different interests and companies meet in a mega-project. The owner of the

megaproject, such as governments and large national companies that have their own

standard and project management teams, tends to face less construction risk during the

project preparation, initiation phase and project life cycle. However, individual owners,

small-sized-companies, medium-sized companies and also operation companies that do

not have their own standards nor a project team to manage and implement (mega) projects

may have increased costs of projects. Kelly, Ledwith and Turner (2010) stated that

projects in smaller and medium companies are managed by people for whom project

management is not their main skill. Andersen et al. (2009) showed, when a small or

medium company is run by a parent organization, the parent organization can affect,

usually negatively, the way projects are carried out, and the adopted project management

processes.

13

Currently most best-practice companies have implemented the Stage-Gate Process

(Cooper , Edgett and Kleinschmidt 2002). Companies such as P&G and ITT in the

manufacturing industry, Exxon in the oil and gas industry, Emerson electronics in the IT

industry, NASA and other international companies in marketing and design industries are

using and are improving the efficiency of the 21th century Stage-Gate Process (Cooper

2008). According to the Construction Industry Institute (2012), most corporations around

the world have been recently using the Stage-Gate Process, also called Front End

Planning, the phase-gate, front end loading, programming/schematic design, and early

project planning to execute the initiation phase or pre-planning phase.

A Stage-Gate Process is a ‘conceptual and operational map for moving new projects from

concept to a new product development process in order to improve effectiveness and

efficiency’ (Cooper 2008, 216). The Construction Industry Institute (2012) defined the

Front End Planning as ‘the process of developing sufficient strategic information with

which owners can address risk and make decisions to commit resources in order to

maximize the potential for a successful project’ (p. 1.01-1). The Stage-Gate Process is

considered as a scalable and flexible risk management model that is used in the pre-

planning stage of small projects and mega-projects in order to reduce the impact of

technical and business uncertainties through different stages and to reduce the time taken

for senior approval (Cooper, Edgett and Kleinschmidt 2002). According to Cooper et al.,

the Stage-Gate Process suits very different types and risk levels of projects as well as the

project management method applied within the Stage-Gate Process; also the Stage Gate

Process helps decision makers and project teams to manage resources and decisions if the

process is provided with accurate and correct information from the pre-planning phase

and final approval of each stage (gate-keeper) is clearly defined to avoid bureaucracy.

14

Stakeholders of a project need to exercise the maximum collective influence during the

pre-planning phase. After each stage, a gate keeper or decision maker who represents a

competent authority is responsible for the approval of each phase with the financial

authority. Figure 1.2 shows the Stages and Gates of the Stage-Gate Process:

Figure 1.2: Stages-and Grates of Stage-Gate Process. Source: adapted from Stage-Gate® website

Table 1.5 shows current industrial Stage-Gate Phases and Gate review (Gate-Keeper) for

the project life cycle for one of the largest Petrochemical companies in the world (SABIC).

Table 1.5: Stage-Gate lifecycle and Gate-Keepers in current industrial project

Stage Gate phases Gate review/gatekeeper

Initiation and Pre-Feasibility Project sponsor/Board/VP/GM/Planning/E&PM

Feasibility (Major Milestone) Project sponsor/Board/VP/GM/Planning/E&PM

Project strategy Project sponsor/Board/VP/GM/Planning/E&PM

Execution plan Project sponsor/Board/VP/GM/Planning/E&PM

Design basis Project sponsor//Board/VP/GM/Planning/E&PM

Basic design & appropriations Project sponsor/Board/VP/GM/Planning/E&PM

Detailed design & construction Project sponsor/Board/VP/GM/Planning/E&PM

Closeout stage and reappraisal The competent authority of the owner

Source: SABIC internal project management standard (2012)

The Construction Industry Institute (2012) defined the Front-End Loading or FEL or

Stage-Gate process as ‘the process of developing sufficient strategic information with

which owners can address risk and make decisions to commit resources in order to

maximize the potential for a successful project’ (P. 1.01-1). Merrow (2011) defined the

front end loading FEL or Stage-Gate process as ‘the core work process of project teams

prior to authorization and the work process. The work process is typically divided into

phases or stages with a pause for an assessment and decision about whether to proceed’

(p. 202). The concept of Stage-Gate process and FEL is the same but the names of the

15

phases and stages are different in each of the industrial fields of oil and gas projects,

petrochemicals and mining projects and this may have an effect on quality of

communication between mega-project parties, contractors and sub-contractors. Table 1.6

shows the current industrial stages of FEL and the name of each phase (Merrow 2011):

Table 1.6: Current industrial phases and name of each phase and cost (Merrow 2011)

Mega-

Projects

FEL1 (Apprise opportunity) FEL2 (Develop scope) FEL3 (Define project)

Mining Concept study or idea definition Prefeasibility study Feasibility study

Petrochemical Business planning Facilities planning Execution planning

Oil & Gas Appraise Select FEED Front End

Engineering Development

Cost Very expensive for

megaprojects

Source: Current industrial phases and name of each phase (Merrow 2011)

Merrow (2011) observed that the current industrial mega-projects in project management

have six phases, two for FEL1, one for FEL2, one for FEL3, one for execution and one

for produce. and three Stage-Gate keepers for decision and review and could be five Stage-

Gate keepers (Figure 1.2) while the Construction Industry Institute (2012) divided the FEL

or Stage-Gate at the pre-planning phase into three stages which are feasibility, concepts

and details scope and under each phase there is a theoretical detailed process. Figure 1.3

shows a basic version of the Stage-Gate process which covers the business case, scope

and readiness before project execution and it includes team dynamics, technology

selection and plan, site factors, design statue and 3D-Model, and project execution

strategy (Merrow 2011).

16

Figure 1.3: Industrial basic Stage-Gate process, Eduard Merrow (2011)

For an accurate and well defined project proposal, the first phase in the Stage-Gate process

to begin the project with is the project definition in order to study the techno-economic

and project business strategy. Prefeasibility and feasibility stages are a review and

assessment for project feature, options and risks related to technical, logistical and

economic parameters of the project in order to test if it lies within the project’s

predetermined acceptance limits and boundary. The legal entity and/or the owner is

responsible for the planning including procedure and practices for research and

technology, corporate strategy and operation. Broad technical scope, project objective and

project strategy would be considered during the design basis phase of the project strategy

and execution plan. The next phase is the procedures and practices of the project scope,

project execution plan and financial commitment. The last phase of the Stage-Gate

process, before implementing the execution phase, is the project delivery and closeout

which contains project specification, budget and schedule. Figure 1.4 shows the

17

theoretical Stage-Gate planning process at the pre-planning phase adapted from the

Construction Industry Institute (2012).

Figure 1.4: Theoretical Stage-Gate planning process at preplanning phase adapted from the

Construction Industry Institute (2012)

However the modern Stage-Gate system is not always effective and benchmarking studies

have revealed that many companies have struggled with the concept, have missed key

facets, principles and methods in the system (Cooper 2008). Wittig (2014) found that the

current mega mining project practices require an integrated framework for Stage-Gate

phases through project development to reduce cost and schedule overrun. Cooper (2014)

wrote Journal article based on several studies under the title ‘What next after Stage-Gate?’

and the aim of this article to look at what leading firms are doing to move beyond their

current Process (Idea-to-Lunch) and to integrate these practices into a next generation. He

listed 25 points to compare traditional Stage-Gate with next generation system and found

that no one company has implemented the whole 25 elements yet in order to move the

next generation system of Stage-Gate. He stated that the next-generation of Stage-Gate

systems is to accelerate projects and some leading companies are working to fast track a

Initiate Phase

Analyse Alternatives

Conceptual Scope and

Estimates

Evaluate and Select

Best Alternates

Concept Phase Report

PDRI2

Initiate Phase

Preliminary

Design/Engineering

Preliminary Design/

Engineering Reviews

PDRI2i

Finalize Scope

Definition

Cost & Schedule

Control Estimates

PDRI3

Project Definition

Package

Initiate Phase

Generate Options

Filter Options

PDRI1

Feasibility Report

Pre-Feasibility Concept Detailed Scope 0 1

1

2 3

18

version of Stage-Gate. Regard learning from experience report, Jordan et al. (1988) argued

that 15% of the time and resources in projects should be spent on front-end work, whereas

Miller and Lessard (2001) suggested up to 35% of time and money must allocated on pre-

planning phase. Of next immediate concern for managers beyond stage is scope/scope-

change.

1.2.6 Scope and scope changing for mega-projects

Project Management Institute PMBOK defines scope as ‘the sum of the products, services,

and results to be provided as project’ (p. 561). PMBOK defined the scope change as ‘any

change to the project scope. A scope change almost always requires an adjustment to the

project cost and schedule. (p. 561). Scope creep also is defined by PMBOK as ‘the

uncontrolled expansion to product or project scope without adjustments to time, cost and

resources (p. 561).

The U.S. National Cooperative Highway Research Program (NCHRP-Report 574) is well-

designed research and provides an effective approach to the solution of many problems

facing highway engineers and administrators in a published guidebook; Guidance for Cost

Estimation and Management for Highway Projects during Planning, Programming and

Preconstruction by Anderson et al. (2006) towards presenting approaches to cost

estimation and management to overcome the root causes of cost escalation. This document

seeks to support the development of consistent and accurate project estimates through all

phases of the development process; NCHRP found that focusing early on internal factors

of project scope will reduce project cost growth at bid time or during construction.

The Australian constructor association identified steps for successful scoping for

infrastructure big scale projects as shown in Table 1.7.

19

Table 1.7: Steps of successful scoping for big scale projects adopted from the Australian constructor

association (2008, 6)

A- Clarity of project objective and requirement:

Identify the stakeholders and end users;

Identify project objectives and requirement by hold a workshop that brings all

together the relevant stakeholders and end users;

Determine the scope needs by setting realistic timeframes and budgets;

Understand of project interfacing with other related project and existing

infrastructure;

Minimize delay if changes to the project occur, project assessment and approval

process should be presented;

Identify and establish the core project team with experience and ability to manage

process;

Empower the project leader with the clear and appropriate authority and

accountability.

B- Clear contract Scope:

Choose appropriate contract delivery method and match method with level of scope

prescription;

Understand prescriptive scope and role of performance then chose appropriate

approach;

Set realistic timeframe to prepare project scope, using an experienced and able

project team;

Check contract package as a whole for consistency prior to tender or contract to

avoid or minimize the incomplete, uncoordinated and inaccurate scope document.

Consulate with tenderer in providing feedback on project scope;

Obtain site information for better determining requirements for project scope.

Capture the value from the successful tenderer’s bid in final contract scope.

Source: The Australian constructor association (2008, 6)

20

However, even with all of these efforts, scope change is still a major issue in engineering

project management especially when there is no scope change control in the project

defined by PMBOK as ‘ the process of monitoring the status of the project and product

scope and managing changes to the scope baseline’ (p. 135). Any poor preparation for

project scope during the pre-planning phase may lead to scope creep that could cause cost

overrun.

In Stage-Gate process or Front-End Loading, the scope and reliability of cost estimation

are developed in FEL2 for FEL3 and the whole project hangs heavily on completeness of

scope developed in FEL2. Merrow (2011) pointed out that ‘one characteristic of front-end

development work is the schedules tend to be rather fluid. It is in the nature of scope

development to be iterative and therefore hard to precisely schedule’ (p. 177).

Aligned with scope becomes contract that seeks to pin-down the obligations and

responsibilities of scope.

1.2.7 Scope changing and contract

PMIBOK defined contract as ‘a mutually binding agreement that obligates the seller to

provide the specified product or service or result and obligates the buyer to pay for it (p.

532). It added that contracts are divided into fixed-prices or lump sum contracts, cost-

reimbursable contracts, time and material contract. Contract (procurement route) is the

corner stone and an important element for project control and lifecycle since it shapes the

behaviour of the project participants. The contract should define simply and clearly scope

and scope of work in the form of the legal, financial and technical aspects of the project

and the rights of the large number of megaproject stakeholders. Lately conflicts of

interests between the project’s parties have become a main issue, while the role of project

21

owner/sponsor/client is to shape the business driver and the concept of project

partnership/or joint venture with technology provider/designer/constructor and

contractors.

There are different types of contracts and no specific type of contract for mega-projects

or heavy projects simply because every project is unique in time and place. However,

contract strategy and success for any project depends on the capabilities of the

owner/sponsor, the nature of the project and engineering, procurement and construction

market. Most engineering mega-projects, specifically in oil and gas, chemicals and

mining, have become confined to limited global corporations and technology owners who

drive the market not the contracts. While some countries and contractors of the

Organisation for Economic Co-operation and Development (OECD) such as EU adopt

Alliances contracts, countries such as the Middle East, Africa, Asia, and South America

use EPC (engineer/procure/construct) Lump Sum and EPC Lump Sum Turnkey (Merrow

2011). Most mega-engineering projects around the world are in the hands of government

or in the hands of nationally based firms but the technology owners are the major drivers

for the project lifecycle.

Contractor and market knowledge are also factors related to achieving a successful on-

time and on-budget project. Carr (1989) found that, in the UK, tendering for work in an

area which contractors had little knowledge of is also a significant reason leading to

project inaccurate estimating. Akintoye and Fitzgerald (2000) found that the major causes

of inaccurate project cost estimation at the early phases in the UK were insufficient time

for tender preparation; poor tender documentation; insufficient analysis of the

documentation by the estimating team. Therefore UK contractors sometimes form joint

ventures with home-based contractor/owner when they tender for work overseas (Potts

22

and Ankrah 2013). The U.S. and other international companies likewise form joint

ventures when tendering for work in Saudi Arabia (public, private, and semi-private

companies). Some Saudi companies have the ability to manage the projects, others hand

the project planning and activities over to the main contractor who may lack knowledge

of the local market. Scope of work ambiguity of mega-project at the scope development

FEL2 stage is one serious engineering mega-projects issue, thus (cost reimbursement)

contract requires presentation at this stage.

Due to the lack of project management team and in order to transfer the risk into contractor

(s), some engineering oil and gas, petrochemicals, and mining companies assign a mega-

project contract by EPC and EPCM contracts or both including Lump sum turnkey

(LSTK).

The EPC contract is usually priced by using fixed price method whereas the EPCM uses

the cost reimbursable method (Sink 2009). According to Merrow (2011), Engineering

Procurement Construction (EPC) lump-sum contracts are the most common form of

mega-project and if the commissioning and start-up are included in the contract then it

becomes Turn-Key. EPC is a contracting approach in which a prime contractor is

responsible for delivering the complete project to the owner/sponsor who needs to ‘turn a

key’ to start the operation. While the cost of EPC contracts is higher than EPCM, EPC

project time is shorter than EPCM and the contractor incurs most of the project risk

(Lampe 2001).

Although EPC Lump-Sum is the predominant contractual method around the world, some

corporations or governments are using hybrid EPC/EPCM reimbursable for engineering

mega-projects. According to the oil and gas industry, Aramco has the world's largest

proven crude oil reserves and largest daily oil production; one of the best current

23

contractual method strategy to meet mega-project challenge is a combination of

Reimbursable/Lump Sum. However, this contractual method needs a relatively

knowledgeable owner/client. Berends (2007) stated that the cost reimbursable type of

contract is being used by the owners of oil and gas mega-projects for the project

development phase in many countries around the world, government control contracting

process and require low bids (traditional contract) to be accepted for public projects.

‘Acceptance of significantly low bids (of mega-projects) almost always triggers project

failure’ (Merrow 2011, 272). Figure 1.5 shows the difference between the traditional

contract and Turn Lump Sum Key contract (LSTK) for industrial mega-projects with

regard to the bidding of procurement and construction. In the traditional contract the bid

for procurement starts after finalizing engineering details, while in current industrial

mega-projects, procurement bidding starts in the middle stages of engineering stage (FEL1

and FEL2) and also the construction bidding starts at the middle of the procurement stage

in order to speed up project process.

Figure 1.5: The difference between industrial mega-project contracts adopted from Aramco internal

project management standard (2011)

While a contract has an inverse relationship with cost control through contract strategy

and pricing format, the contract relationship with scheduling represents tender and award

24

schedule. Moreover, the contract relationship with the planning department is contract

packaging and bid sequence (See Figure 1.6 adapted from Aramco internal standard.

Figure 1.6: Contract and cost control for megaproject adapted from Aramco internal project

management standard

Sinnette (2004) discussed the importance of estimates in establishing accurate

performance expectations at each step of the mega-project's development in U.S., he

suggested steps to improve large scale project cost estimation of packaging the contracts,

he stated that ‘extremely large construction packages also have the potential to reduce the

number of contractors capable of bidding and may need to be broken up into smaller

contracts to attract additional competition.’. Sinnette (2004) also suggested that ‘perform

a value analysis to determine the most economical and advantageous way of packaging

the contracts for advertisement’ (p. 40-47).

To conclude, a mega-project involves many different types of contracts during the project

lifecycle such management, engineering, design, procurements, construction,

commissioning, start-up, maintenance and operation. Choosing an appropriate contract

strategy for each phase and stage of mega-project starting of the preplanning phase and is

Contract

Contract strategy

Cost Control Pricing format

Contract Scheduling Tender/Award

schedule

Contract Contract Packaging/Bid

Sequences

Planning

25

still considered a (somewhat complex) business management task due to owner/client

contract management strategy of mega-projects that drives by time of achieving the

phase/task/activity/project.

1.3 Research Aim, Objectives and Scope

1.3.1 Research aim

The main aim of this research was to evaluate the mega-project management process being

applied in two (mega) projects at the project development phase and construction phase.

In the work the medium-sized organization, the focus of this research study, had

experienced overrun(s) of two mega-projects with regard to budget, time and resources

during the preparation phase/ prefeasibility /feasibility/execution/start-up phases, and had

faced also many uncertainties during the course of the project lifecycle which had caused

many change orders during the basic design /detailed design /procurement /construction

/operation phases. There are many issues in mega-project management such as two

international traditional systems for a mega-projects at the early preplanning phase,

traditional contracting and procurement systems, scope-change and scope creep which is

resulting in a waste of project resources and time. This research study therefore was

designed to clarify the processes used on the two mega-projects especially at the

preplanning phase in order to recommend improvements to the project lifecycle process

for future projects.

1.3.2 Research objective

This particular research was designed to evaluate the project management processes used

in two mega-projects in Saudi Arabia in order to devise an improved project management

26

process framework for the mega-project preplanning, initiation, prefeasibility, feasibility,

and construction, delivery and start-up phases as well. This primary aim can be broken

down further into a number of key objectives. Table 1.8 shows the specific objectives of

this research and the methodology used.

Research.

Table 1.8: Research objectives and methodology approaches

Objective Methodology

Determine the process used in the early stages of

the two Mega-projects;

Qualitative- semi structure face to face interview

and documents for the following questions, refer

to Section 4.2; Question 5, Question 10, Question

19, Question 23, Question 28, Question 30

,Question 39,Question 44, Question 51, Question

58, Question 59 , Question 62, Question 65 and

Question 78.

Identify the measures used for the Mega-projects

at the early stages to avoid project life cycle

problems and to speed up implementation of

project activities without compromising the

quality of work and project;



to Section 4.2; Question 15 and Question 39.

Determine the factors impeding the effectiveness

of the measures;



to Section 4.2;

Question 9, Question 22, Question 46, Question

47 and Question 78.

Determine the personnel’s knowledge in relation

to technical tasks;



to Section 4.2;

Question 16, question 17, Question 18 and

Question 19. Ascertain the adequacy of training in the process

used;



to Section 4.2;

Question 21, Question 72 and Question 78. Determine how scope of work, scope change and

scope creep were mitigated;

Determine the type and effectiveness of the Mega-

projects’ contracts;



to Section 4.2;

Question 3, Question 4, Question 12, Question 13

and Question 24.



to Section 4.2;


47, Question 48, Question 49, Question 50,


54, Question 55 and Question 56.

27

Determine the internal and external factors

affecting the effectiveness of the Mega-projects’

contracts



to Section 4.2;




54, Question 55 and Question 56. Establish the evaluation techniques used on the

Mega-projects and their effectiveness;



to Section 4.2;






55 and Question 56, Question 57, Question 58,


62, Question, 63, Question 64, Question 65,

Question 66, Question 67 and Question 68.

Determine the internal and external factors

affecting the effectiveness of the evaluation

techniques;



to Section 4.2;






54, Question 55 and Question 56, Question 57,


61, Question 62, Question, 63, Question 64,

Question 65, Question 66, Question 67 and

Question 68. Establish how risk was assessed and monitored

during the pre-planning and construction phases;



to Section 4.2;


51, Question 52, Question 53, Question 54. Establish to what extent technology and software

were used and how effective they were in all of

the lifecycle stages;



to Section 4.2;




40, Question 41 and Question 42.

Evaluate the performance of the design teams

from pre-planning through to feasibility stages;



to Section 4.2;



Question 75, Question 76 and Question 77.

Determine the factors affecting the performance

of the design teams from pre-planning through to

feasibility stages;



to Section 4.2;


69, Question 70, , Question 71, Question 72,

28


76 and Question 77.

Determine the function analysis techniques used

and their effectiveness;


documents for the following questions, refer to

Section 4.2;

Question 69, Question 70, , Question 71, Question


Question 76 , Question 77, Question 78, Question


Question 83 and Question 84. Establish which factors impeded the effectiveness

of the function analysis.


documents for the following questions, refer to

Section 4.2;

Question 80, Question 82, Question 83, and

Question 84

1.4 Scope of the Research

The scope of this particular research was designed to evaluate the project management

processes used in two mega-projects in Saudi Arabia in order to devise an improved

project management process framework for the mega-project preplanning, initiation,

prefeasibility, feasibility, and construction, delivery and start-up phases. The study

focuses on activities, practices and processes of executives, managers and main

contractors, managers’ during project lifecycle and starting of preplanning phase. The

scope of the study is limited to CEOs, VPs, executives and higher management within this

Saudi ‘operation’ mining company and two subsidiaries that had worked for the two

mega-projects during the preplanning phase. A series of in-depth interviews were

conducted over three months with participants who had been involved with the planning

and delivery of mega-project at the preplanning phase in order to obtain an in-depth

understanding of the key issues at this critical stage.

1.5 Significance of the Study and Research Contributions

There is a need to address the process and techniques of project management and its

implementation, as preplanning project management teams strive to deliver a quality

29

product at a predicted cost, within a set timescale for engineering and construction. It

might be suggested that project engineers and design teams, generally, are failing clients

if they are unable to deliver what they have been requested to do (a suitable realisation of

the project brief), within an agreed budget and an accurate timeframe. ‘Although there are

no articles addressing comparative analysis of time delays in large projects, there is a

strong relation between delays and cost overrun’ (Giezen 2012, 782). A number of

benefits will be gained from this research project. These benefits will take the form of

both theoretical benefits and benefits to industry.

1.5.1 Theoretical benefits

The contribution of this research study of preplanning phase of two megaprojects for the

same operation company, under different managements and different main contractors can

boost understanding of the mega-project preplanning process phase in the fields of

academia since many project management in the field of academia have lack the holistic

view and understanding of mega-projects project process starting from preplanning phase;

this research study was designed to assess, clarify and evaluate mega-projects processes

in order to help to reduce the scope change and scope creep starting from the preplanning

phase.

1.5.2 Benefits to industry

The results of this research are expected to have a number of significant benefits to

the construction industry. These include the ability to:

30

Many project management practitioners, engineers, technicians and developers

of software engineering tools have lack the holistic view and understanding of

mega-projects project process starting from preplanning phase;

Enhance understandings among shareholders, stakeholders, departments and

individuals will lead to shortened preparation time for the implementation

phase of a mega project; specifically tasks at each stage should be finished in

a shorter time with high quality and on budget; change orders and scope of

works will be minimized;

Improve project performance starting of preplanning phase and passing by

design phase until the start-up phase;

Reduce the ambiguity of Mega-project process at the preplanning phase for

professional and individual staff;

Improve communication, enhance cooperation and enthusiasm among the

project parties and also it may help to minimize the number of change orders

and scope creep possibilities;

This may also lead to Mega-project time and budget savings at the early stages

and during the project lifecycle in general.

In order to overcome many of the previously highlighted difficulties, the outcome of this

research study was the development of a mega-project road map and hybrid stage-gate

process for future preplanning phases.

1.6 Research Approach and Design

Two case studies for two mega-projects are applied and data were collected from CEOs,

VPs and executives, directors’, managers, of the two subsidiaries and one project main

31

partner. Case studies of this kind can help the researcher to understand the approaches

taken by top management when implementing mega-projects at the preplanning phase.

Unbiased data collection approaches adopted / supported for the main source of

information Government and CEOs’. Eighty four questions divided into six categories and

different approaches. The research questions are derived from the research literature, but

they could come from current business practice or your initiative hunches (Marshall and

Rossman 1989).

1.7 Thesis Overview

This research thesis comprises seven chapters:

Chapter 1: Introduction and background.

Chapter 2: Literature review related to the research topic and questions.

Chapter 3: Methodology and research design.

Chapter 4: Results of interviews.

Chapter 5: Discussion of results.

Chapter 6: Study outcome: Mega-project preplanning phase road map

Chapter 7: Conclusions and recommendations

1.8 Chapter Conclusion

The chapter provided a background and statement of megaproject problem, namely, cost

overrun, delay of time during the preplanning phase, construction phase, and start-up

phase, quality issues for small and medium companies that intend to build high quality

mega-projects, scope changes, scope creep, stage-gate process/FEL, contract issues and

lack the holistic view and understanding of mega-projects project process at preplanning

32

phase by practitioners and academics. Having introduced the mega-project orientation of

this study related to project management tools and techniques, and the need for

(re)development of these towards improved processes, the following chapter provides a

more expansive literature review of planning, organizing, controlling, monitoring and

feeding-back information to better address resourcing of projects.

33

CHAPTER TWO

2 LITERATURE REVIEW

2.1 Introduction

This chapter presents an overview and analysis of megaproject management research and

associated issues of mega-engineering projects at the preplanning phase including

traditional project management system, process, scope of work and traditional contracting.

Specifically this chapter is devoted to the research examining the preparation of mega-

engineering scale projects, and consists of four parts.

The first section shows a number of sub questions were considered by this research of

industrial mega-engineering project for preplanning phase.

The second section covers planning, cost overrun, and delay of schedule, and quality

issues starting from the preplanning phase.

The Third section analyses studies on traditional mega-project methodologies used during

mega-project life cycle, issues, their advantages and disadvantages.

The forth section introduces the traditional Stage-Gate Process for the mega-project

lifecycle and planning.

The last section discusses the ongoing issues for projects in general including intervention

of scope, scope change, scope creep in relation to project lifecycle, success factors and

obstacles and mega-project contractual issues.

34

2.2 Study Objective

This study was designed to evaluate the project management processes used in two mega-

projects in Saudi Arabia in order to devise an improved project management process

framework for the mega-project preplanning, initiation, prefeasibility, feasibility, and

construction, delivery and start-up phases as well. This primary aim can be broken down

further into a number of key objectives. The specific objectives of this research were;

1- Determine the process used in the early stages of the two megaprojects;

2- Identify the measures used for the (mega)-projects at the early stages to avoid

project life cycle problems and to speed up implementation of project activities

without compromising the quality of work and project;

3- Determine the factors impeding the effectiveness of the measures;

4- Determine the personnel’s knowledge in relation to technical tasks;

5- Ascertain the adequacy of training in the process used;

6- Determine how scope of work, scope change and scope creep were mitigated;

7- Determine the type and effectiveness of the megaprojects’ contracts;

2.3 Study Questions

The questions this study sought to address were:

1- Is there a relationship between project management process, scope creep, value

management, contractual arrangement, procurement and software programs

generally in terms of speed up project delivery?

2- Are traditional project management process adequately addressing the key

variables of “scope” as applied to mega-project?

35

3- Can current stage-gate project management practices and activities be

structured objectively for more efficient realization of mining mega-project

briefs?

4- Are any of the constituents of antecedents of stage-gate project management

applied in the medium and small scale companies, albeit under the guise of

more traditional approaches?

5- Can stage-gate project management practices and activities be structured

objectively for a more efficient realization of mega-project briefs?

6- Identify the characteristics of successful mega integrated project for medium

mining operation firm that is rich of natural resource and lack of project

management team.

7- Is there a relationship between size of the mega-project and project delay?

8- Can mega-project shorten to less stage-gate phases in order to save money,

time and effort during the initial stages of the project?

2.4 Data Collection Methodology Approach

The data collection method of this research was collected from different chief executive

officers, vice presidents, executives and higher management of the two subsidiaries and a

partner of one of the megaprojects mega-project management staff in the mining

construction industry and two case-business studies. This was achieved by doing semi-

structured face to face interviews in five cities for two case studies of two mega-projects

processes and with two subsidiaries that worked under the supervision of the parent

company for over three month period. The data collection method includes individual

official interviews and documents such as technical and non-technical reports, annual

36

reports, design and drawings documents, specifications, financial information, work

activities and tasks, contract agreements, minutes of meetings, internal memoranda,

booklets, brochures and journal article and newspaper. Qualitative methodological

approach was chosen for this research in order to obtain expert points of view about the

events which had affected the course of the two megaprojects starting from the

preplanning phase, including the project lifecycle, particularly to examine and evaluate

the reasons behind the continuous change orders and scope of work change of both

megaprojects. The data collection method of this research was supported by official

approvals from the CEOs’ of the two subsidiaries, an official letter from the government

and the university. A total of 15 in-depth face to face inter-views were undertaken during

over three months, and follow up email took place after doing the interviews in order to

clarify some of small issues with some participants. The interviews the length varied from

45 minutes to three hours. A guideline for interview questions was provided in Appendix

A. It consisted of 84 open-ended questions. Each question, however, was only a point of

reference. The researcher began the interviews with questions similar to the questions in

the guideline, and then depending upon the responses received, he moved into probing

questions. Probing questions were useful in gaining more insights and clarifying the

answers from the respondents.

2.5 Existing Research

2.5.1 Mega-project cost overrun, delay of time and quality issues

Flyvbjerg (2007) and Aalborg University in Denmark conducted several studies in 20

European countries, focussing on the development of 258 public-private large

37

transportation infrastructure projects; problems, causes and cures in policy and planning

during preplanning phase for 58 rail, 33 bridge and tunnel, 167 roads and found that large

scale projects misinformation of costs at the preplanning phase leads to cost overrun,

benefits shortfalls and waste. They also found cost overrun on large public-private projects

occurred due to underestimation of large scale projects cost at pre planning phase, and it

occurred for 9 out of 10 projects throughout Europe for the last 70 years. They focused on

a process structure of large scale projects, and presented better improving planning

measures. They suggested that large scale public and privet projects at preplanning phase

including cost, risk and benefits must be reviewed by an independent external

organization. They listed the preplanning phase problems of large scale public-privet

projects in the following points;

Large scale projects preplanning take long time to plan, and it is complex and risky

due to the existence of different authorities around projects site (project interface);

Complexity and advancement of technology complicated the project’s design at the

preplanning/planning phase (s);

Personal interests of projects multi-actors decision makers;

Changing project scope of work over time;

Unplanned project tasks/activities affect projects budget;

Shortage of information about the costs and risks at the preplanning/planning phase;

Most of the projects had cost overrun as a result of the poor planning and

misinformation in the preplanning/planning phase.

Flyvbjerg (2008) also re-examined several studies in 20 European countries for a large

transport infrastructure projects in order to better predict large scale project performance

and to evaluate the large scale project cost overrun and time, and inaccuracy of estimations

38

and forecasts during the preplanning phase, and they found that there were over-estimation

of project benefits and success in positive way by owner/clients and also under-estimating

of cost and time strategically at the preplanning phase in order to obtain project funding

were the two main factors that caused cost overrun and delay of projects.

Another study evaluating a mega-project cost overrun and time to reduce the complexity

and uncertainty at the preplanning phase was carried out by Giezen (2012) who used a

case study method with interviews in the Netherlands; he found that the costs of mega-

projects usually overran because of optimism bias or strategic misrepresentation.

Another study by Marrewijk et al. (2008) conducted 85 and 30 biographical in-depth

interview for two public-private mega-projects in Netherlands (infrastructure) and

Australia (water tunnel) in order to determine the impact of mega-project culture and

management, project design and daily practice on the level of cooperation between

partners; they found that project culture and design determine ‘project design and project

cultures and rationalities play a central role in influencing successful cooperation between

partners (p. 599). They added that ‘the practical rationalities and practices of the (mega)

project players need to be considered’ (p. 600). They concluded that the advancement of

technology was critical element in design phase and it must be considered at the

preplanning phase.

Assaf and Al-Hejji (2006) carried out a study to determine the causes of large construction

project delays using a time performance questionnaire survey with 15 owners, 23

contractors and 19 consultants. Their study found 73 causes of project delay in Saudi

Arabia and found that the most common cases of delay identified were change order and

the owner.

39

Another large-scale infrastructure (public bridge) project study in the U.S. was undertaken

by Frick (2008) in order to evaluate the impact and implications of the complex modern

technology on the planning process, project design and implementation (risk association);

data collection was through in-depth interviews with 45 key participants in the U.S. and

an extensive review of project-related documents and media accounts. She found that the

complexity of project influenced design, project outcomes, project fund, and increase

project cost overruns.

Another comparative research study conducted by Akintoye (2000), using a survey of 84

UK contractors (small, medium and large) examined the factors contributing to delays

and increased costs in construction phase and identified several factors influencing project

cost during the (construction phase). These influencing factors represent project size and

scope of project, project duration, complexity of design, organization's expectation of

project, tender period and market condition, extent of completion of pre-contract design,

contractual arrangement and form of procurement, delivery of long lead items, capability

and number of the firm team and project team, method of construction, expertise of

consultant, site constraints, client’s financial position, buildability and location of the

project. He suggested seven factors to be considered by contractors during the

construction phase; (1) project complexity, (2) technological requirements, (3) project

information, (4) project team requirement, (5) contract requirement, (6) project duration

and (7) market requirement.

Zou et al. (2007) conducted a postal questionnaire survey with 60 construction

practitioners in Australia to identify and analyse the risks associated with the development

of construction projects from project stakeholder and life cycle perspectives and found

that 51 risks are able to influence the project objectives or lifecycle; these are related to

40

cost, time, quality and safety starting from tight schedule at preplanning phase and

influencing the five phases of project lifecycle including operation phase. The key risks

were associated with feasibility, design, construction and operation phases respectively.

Zou et al. also highlighted the main 20 related risks to owners, designers, contractors,

subcontractors, government authorities/bodies and external environment risks (see Table

2.1). They concluded that owner, project designers and government authorities should

work together at the preplanning phase in order to address project potential risks in time

and to create value, meeting project tactical and strategic objectives and requirements.

Also companies (contractors and subcontractors) with good organizational knowledge

management processes (strategy, culture, process, technology, management, corporate

politics) must join large scale projects from early phase and cooperate with project teams

in order to minimize risks during construction phase.

Table 2.1: The 20 main key risks that influence project objectives (cost, time, quality and safety)

1- Tight project schedule;

2- Inadequate program scheduling;

3- Unsuitable construction program planning;

4- Inadequate or insufficient site information;

5- Lack of coordination between project participants;

6- Occurrence of disputes;

7- High performance/Quality expectation;

8- Incomplete or inaccurate cost estimation;

9- Incomplete approval and other documents;

10- Excessive approval procedures in administrative government departments;

11- Bureaucracy of the government;

12- Design variation;

13- Variation by the clients;

14- Variation of construction program;

15- Unavailability of sufficient professional and managers;

16- Unavailability of sufficient amount of skilled labor;

17- Price inflation of construction materials;

18- Low management competency of subcontractor;

19- General safety accidents occurrence;

20- Serious noise pollution caused by construction. Source: Zou et al (2006, 7)

41

In conclusion, this section has shown there are many reasons for cost overrun and mega-

project delay. The larger the size and complexity of the project; the more uncertainties

and risks in all its form surround it.

2.5.2 Mega-project management approaches

A case study conducted by Matos and Eurico (2013) was designed to determine which of

the two main methodologies (PMBOK or PRINCE2) should be applied to information

technology project; they found an overlap and gap between these approaches. They

concluded that ‘from a point of view of project planning both methodologies (were)

similarly, and at the point of project documentation and following up, PMBOK (was)

more completed’ (p. 793).

Another study conducted by Morris and Jamieson (2005) and funded by PMI, industry

and academia and reviewed evidence from four case studies with questionnaire data from

project management Institute-Europe members; their findings showed that the processes,

practices, and people issues involved in moving from corporate strategy to programs and

projects is done in a systematic way. They found that, in the study phase, project process,

practice and people need to be involved in moving ideas to practice at the preplanning

phase. The paper concluded that future revisions of the PMBOK Guide should be looked

at. They added that ‘project strategy management (was) an underexplored and

insufficiently described subject in the business and project literature, it (was) in fact, a

relatively well-trodden area, deserving of more recognition, formal study, and discussion’

(p. 6).

Another study carried out by Thomas (2014) to review and compare the advantages and

disadvantages of PMI/PMBOK and PRINCE2 certifications/certificate concluded that

42

PMBOK did not cover pre-project process and only provided scant advice, while

PRINCE2 showed what or who should be in place at the beginning of a project. He added

that the PMBOK covered the actual procurement, pre-assignment or negotiation for team

members for a project in some detail, needs of human resource management and only

considered the project plan, while PRINCE2 covered a complete change control approach,

offers stage and team plans and discussed the advantages of breaking the project plan

down.

A master - thesis study conducted by Al Matari (2014) aimed to combine PRINCE2 and

PMBOK in a single methodology; he concluded that both PRINCE2 and PMBOK should

be ‘tailored’.

In conclusion, this section (alongside earlier ‘Background’ discussions) highlight the

advantages and disadvantages of the two main project engineering approaches, PMBOK

and PRINCE2, as well as the difference between the two widely used professional

certificates of project management in order to develop a project from idea to product. Both

traditional approaches can be seen in small-sized companies/contactors/subcontractors,

medium-sized contactors/subcontractors, and some small/medium sized operation

companies.

2.5.3 Stage-Gate process

The President of the Product Development Institute and the developer of Stage-Gate®

model, Cooper (2008) conduces a study to re-evaluate the Stage-Gate Process and to

clarify misconceptions and challenges in using the Stage-Gate Process. He found that the

challenges of employing the Stage-Gate Process are governance issues, over

bureaucratising the process, and misapplying cost cutting measures in product innovation.

43

He suggested some solutions; better governance method, clearly defined Gate-

keepers/decision makers and their roles of engagement and leaner Gates to deal with

bureaucracy. He found the Stage-Gate Process is not static but always changing and many

companies adjust it to their own circumstances.

The creator of the Stage-Gate® Process, Cooper (2014) published an article in research‐

technology management that summarises a number of published articles and books under

the title ‘What next after Stage-Gate?’ and the aim of this article to look at what leading

firms are doing to move beyond their current Process (Idea-to-Lunch) and to integrate

these practices into a next generation. He listed 25 points to compare traditional Stage-

Gate with next generation system and found that no one company has implemented the

whole 25 elements yet in order to move the next generation system of Stage-Gate.

Richard Wittig (2014) conducted a study to suggest a vertically integrated framework for

the four study phases (Resource Planning, Concept, Pre-feasibility and Feasibility)

through project development phase, and to outline the Australian mining industry

practices for project development phase. He found that the current mega mining project

practices require an integrated framework for Stage-Gate phases through project

development to reduce cost and schedule overrun. He suggested a vertically integrated

framework for the four Stage-Gate phases through project development in order to

increase the links between project developments program and project portfolio

management and presented a new vertically integrated model in an optimised project

development life cycle.

Weijde (2008) conducted a research study in order to evaluate and to provide a scientific

basis for understanding and analysing the FEL or Front-End Loading development

phases/process of capital expenditure of oil and gas projects for Royal Dutch Shell, and

44

to present a framework for fitting the front-end development to the specific project

situation. FEL index is one of the six key performance indicators in IPA benchmarking

that is used to measure the level of definition a project has attained at a moment in time

(Weijde 2008). He found that project development phases or processes improved cost

predictability, enhanced cost effectiveness, produced better schedule predictability and

faster project delivery, optimised scope and operability and safety performance (p. 22).

Edkins et al (2013) conducted a multi-case exploratory investigation for the earliest stages

of projects and project management by using in-depth interviews with 9 senior project

management representatives of nine multinational project management companies in UK.

The main aim of this investigation is to describe, understand and evaluate the front-end

project management (FEL) since it is not well documented in the literature, and it is issues,

responsibilities, roles and actions were too often ignored by ‘official project management

guidance’ (p. 72). They found that ‘aspects of the front-end management are not within

the normal remit of what is considered to be traditional project management’ (p. 71). Also

they found a series of findings some related to process and other related to organization

actors/decision makers. Moreover they found the project management PMBOK begins

after the identification and collection of the project requirements but it has an important

role prior to that point. They listed 7 points about the process and management:

A- Project Process:

1- Literature was not well documented the definition of FEL project management;

2- The way of thinking of project management during early phases (advice and

recommendation of technology, schedule, risks, estimation, procurement, people)

different than the way of thinking at the execution phase (complete on time and on

budget);

45

3- In large, complex and urgent projects, economic and commercial considerations

dominate project governance at the early stages and both fields have a lack of project

management. There is a need for robust discipline for managing mega-projects;

4- A few companies worked in detail on an execution strategy but few had an explicit

strategy. Most of the projects (e.g. oil companies), but not all (e.g. manufacturing

companies), performed some systematic value management. Moreover formal

algorithmic or proportional risk contingency plans were not allocated to budget;

formal risk management was used in most cases.

B- Organization actors/decision makers:

5- In the Front-End loading early phases, the manager should fit the competency and

should fit the project role;

6- There is a less freedom for individuals to do their own work in project management of

larger organizations because of strict systems and standards, while in small creative

and innovative project management companies’ agility and informality are the norms;

7- ‘The application of project management processes, the articulation of preferred

methodology, and the definition of desired competencies was contingent on: (a) the

characteristics of the project; (b) the characteristics of the environment the project is

to operate in and (c) to some extent, the characteristics of the parent organization and

the sponsor’(p. 83-84).

There is industrial information about project lifecycle starting from the early phase. Morris

(1990) conducted a comprehensive survey in issues involves in initiation phase of project

management or management of project from 1950 to 1980 and found that project

management was reflected only in the project life cycle, and ignored in the critical front-

end. Years later, a leading thinker in project management, Morris (2011) followed

46

previous literature review and found that ‘It is evident from an extensive amount of

research that management of the front-end definitional phases of projects is of

overwhelming importance to their ultimate outcome yet we have little empirical data to

suggest how best management competencies here should be improved’ (p. 7). He added

that ‘If we want to be really effective in improving project management performance we

should therefore be focussing on the front-end’ (p. 4). Morris (2013) in his study about

reconstructing project management reprised from a knowledge perspective concluded that

the ‘obvious immediate needs are to focus more on improving sponsor value and on

shaping the context (process) in which projects and programs are formed and

implemented’ (p. 23).

Shlopak et al. (2014) conducted a study of megaprojects and building projects’ Front-End

Loading or FEL process (also referred to as Pre-Project Planning, Early Project Planning,

Feasibility Analysis) to address construction issues related to planning within the pre-

contract phase of shipbuilding megaprojects in Norway. They found that Front-End

Loading or FEL process was not effective enough and for best practice process more

efforts and work be needed. (p. 281)

Samset and Volden (2015) conducted seven in-depth case studies to explore strengths and

weaknesses in the FEL processes of analysis and decision-making during the early phase

before the final choices of conceptual solution were made in seven major public

investment projects in Norway. They found that ‘governance or steer regimes for major

investment projects comprise the processes and systems that need to be in place on behalf

of the financing party to ensure successful investments’ (p. 2). They concluded that there

are frequent deficiencies in these processes, and that the potential for improvements is

huge, also ‘what happens during the front end phase is essential’ (p. 2). They added that

47

the greatest potential for improvement lies in strengthening the analytical process, as well

as making decision processes transparent. They summarised his findings in the following

points (p. 3-8):

Success is measured in terms of tactical performance rather than strategic

performance;

Less resources are used up front to identify the best conceptual solution (project

governance), than to improve tactical performance during implementation (project

management);

Decisions are based on masses of detailed information up front rather than carefully

selected facts and judgmental information relevant to highlight the essential issues;

The choice of conceptual solution is made without systematically scrutinizing the

opportunity space up front;

Strategy and alignment of objectives are highlighted as essential concerns, but in most

cases the internal logic of causalities and the probabilities of realization are erroneous.

Duimering et al. (2006) conducted a study, using interviews, with new product

development process managers in a large telecom firm in Canada in order to examine the

influence of product requirement ambiguity on new product development task structures.

They found that new product development task structures change during the product

development process as a result of requirement ambiguity, task expansion, contraction,

substitution and combination. They also found that communication, coordination,

knowledge and problem solving activities during project early phases effect on the project

team of new project development tasks and activities structure. Moreover, they found that

knowledge of how new product development project task structures evolve can lead to

improved strategies for managing projects with ambiguous requirements. .

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In conclusion, this part of the literature review shows that, currently, most international

leading firms are using traditional Stage-Gate Process or Front end loading process, and

trying to move toward a new fast-track generation of Stage-Gate Process, yet there is lack

of understanding of the Stage-Gate Process and how it is implemented. These studies show

this system can contribute to the success of a project. These studies, while not necessarily

directed at megaprojects in the mining industry, nevertheless may be pertinent as they

underscore the importance of achieving objectives.

2.5.4 Scope, scope changing and scope creep for engineering projects

It has long been suggested by some researchers that the more we try to close the process

and reduce the scope of the project, the less influences we get from outside and the less

feedback about alternatives and uncertainties is brought into the process (Deutsch 1966;

Innes and Booher 2010).

A number of researchers have focused specifically on scope and scope change of mega-

projects. (Shane et al. (2009) conducted studies on large scale public-private

transportation projects for over 20 state highway agencies in order to determine the level

of importance of estimates in establishing accurate performance expectations at each step

of the project's development phase, and they found that around 50% of the active large

transportation projects in the U.S. had cost overrun in their initial budgets. They also found

that there were 18 internal and external factors that affect large scale projects cost

estimation at the project development phase. (See Table 2.2). Moreover scope change and

scope creep represent the main internal and external factors that affect cost estimation the

preplanning phase. He concluded that ‘any one of the 18 cost escalation factors can taint

the project for the owner, the designer, and contractor’ (p. 227).

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Table 2.2: Internal and external factors affect the estimate in preplanning phase adapted from (Shane

et al. 2009)

Internal factors External factors

Bias

Delivery/procurement approach

Project schedule changes

Engineering and construction

complexities

Scope changes

Scope creep

Poor estimating

Inconsistent application of

contingencies

Faulty execution

Ambiguous contract provisions

Contract document conflicts

Local concerns and requirements

Effects of inflation

Scope changes

Scope creep

Market conditions

Unforeseen events

Unforeseen conditions

Source: Adapted from Shane et al. (2009)

Galloway (2009) stated that changing the scope of work during the design phase led to

different effects from changes in the construction stage.

In Stage-Gate Process or Front-End Loading, phase FEL2 is specifically used to develop

the scope and reliability of cost estimation for FEL3 and the whole project hangs heavily

on completeness of scope developed in FEL2. Merrow (2011) pointed out that one of the

scope development drawbacks is to precisely schedule it because of the shaping process

during ongoing scope development phase.

Jergeas (2008) conducted research, survey 87 professionals and investigation for three

Alberta mega-projects for oil sand in Canada with a total value of $10 billion Canadian

dollars, and the research focus was on front-end loading with special emphasis on the

project early engineering effort, and change to scope during the early stages of the project

life cycle after the appropriation for expenditure. He found that ‘incomplete scope

definition or inadequate Front-End Loading and poorly completed Front-end deliverables

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including milestone schedule slippage in Front-end loading’ (p. 98). He added that some

project strategies did not considered the level of scope definition.

In conclusion, these research studies show that scope change is still a major issue in

engineering project management, especially when there is no scope change control in the

project. Any poor preparation for project scope during the mega-project preplanning phase

may lead to scope creep that could cause cost overrun.

2.5.5 Scope development and contracts

Many researchers, in addition to determining the factors affecting megaproject lifecycle

related to cost, time and quality, and examining scope change, have examined the effects

of contracts on scope. Smith (1995) conducted series of survey in UK for estimating,

tendering and bidding for construction projects at preplanning phase three main factors

may lead to inaccurate project estimates in UK: inappropriate assessment of risk,

inappropriate contract strategies and human characteristics of the individual estimator.

Assaf and Al-Hajji (2006) carried out a study to determine the causes of large construction

project delays during construction phase using a questionnaire survey on time

performance with 15 owners, 23 contractors and 19 consultants. Their study found 73

causes of project delay in Saudi Arabia and found that the most common cause of delay

identified was change order. They listed the causes of project delay during the construction

phase that were related to contract (see Table 2.3).

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Table 2.3: Contract issues related to causes of construction phase delay

No. Causes of delay Group

1. Original contract duration is too short Project management

2. Legal disputes b/w various parties Project management

3. Inadequate definition of substantial completion Project management

4. Ineffective delay penalties Project management

5. Type of construction contract (Turnkey,

construction only,)

Project management

6. Type of project bidding and award (negotiation,

lowest bidder,)

Project management

Source: Adapted from (Assaf and Al-Hajji 2006)

In 2006 the Australian contractor association and Black Dawson commercial law firm

published a report with the findings of a study into Australian construction and

infrastructure public and private projects. The report’s key finding was ‘the industry

practice in relation to the scoping of big scale projects was often seriously inadequate’ (p.

4). This may be the result of the inability of less able owners/clients to communicate their

brief, needs and problems, and their lack of knowledge and ability to communicate the

local standards/requirements/user-needs/fit-for-purpose-minimums and a lack of a

knowledge-able main-contractor and sub-contractors. Lack of ability to provide a detailed

brief may result in cost and time increases.

Regarding the contract strategy, Jergeas (2008) -mentioned previously- found that

contract strategies relating to management, design, construction, and commissioning

services were driven by time rather than cost. He added that there were a lack of

knowledgeable leadership in procurement.

Loots et al. (2007) conducted a project study entitled: ‘EPC and EPCM Contracts: risk

issues and allocation’ aimed to examined the advantages and disadvantages of each

contract and its process (engineering, procurement, construction and management). They

found that both contracts differed markedly and, in order to seek competitive tendering,

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the level of bid and tender package conditions presented by the project owner must neither

be too general nor too detailed.

Another interview questionnaire survey study conducted by Al-Harbi et al. (1994) in

Saudi Arabia in order to identify the need for a standard work item breakdown coding

system, to provide consistent project and to identify the main problems facing estimators.

He found that after compiling tenders for building works; there were tough competition,

short contract period, incomplete drawings and specification, incomplete project scope

definition, unforeseeable changes in material prices, change in owner requirements,

current workload, error in judgement, inadequate production time data, lack of historical

data for similar jobs, lack of experience for similar projects.

Akintoye and Fitzgerald (2000) conducted a questionnaire survey of 200 contractors in

the UK (small, medium and large) to investigate cost estimating practices of contractors

for construction projects. They found that the major causes of inaccuracy in cost

estimating was insufficient time for tender preparation; poor tender documentation;

insufficient analysis of the documentation by the estimating team; low level of

involvement from the site team that would be responsible for construction; poor

communication between the estimating and construction teams and lack of review of cost

estimates by company management.

Shane et al. (2009) conducted an in-depth literature review on large scale public-private

transportation projects for over 20 state highway agencies in US in order to determine the

level of importance of estimates in establishing accurate performance expectations at each

step of the project's development phase, and they found that 14 risk factors can escalate

cost and increase possibility of cost overrun. They classified these factors into internal and

external; internal factors can include ambiguous contract provisions, contract document

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conflicts inconsistent application of contingency and faulty execution. They added that

‘often only large contractors or groups of contractors can work or even obtain bonding for

a large project. Size of the project affects competition for a project and the number of bids

that an agency/owner receives for the work. Typically, the risks associated with large

projects are much greater, both for the owner and contractor, and that affects project costs’

(p. 226). Moreover, they also found that large scale project ‘ambiguous contract

provisions dilute responsibility and cause misunderstanding between an owner and project

design and construction contractors’ (p. 225). They also found that contract document

conflicts lead to errors and confusion while bidding and, later during project execution,

they cause change orders and rework (Callahan 1998; Chang 2002; Harbuck 2004; Mackie

and Preston 1998; Touran et al. 1994).

Singh et al. (2010) conducted a research study to investigate various issues related to

delays and cost overruns in publically funded infrastructure projects. The data included

850 projects across 17 infrastructure sectors in India. They found and proved that there is

a relationship between delays and cost overruns; the contractual and the institutional

failures are economically and statistically significant causes behind cost and time

overruns; also they found that delay and cost overrun occurred due to poor contractor

selection and unethical behaviour, contract bid amount, difference between the winning

bid and second bid, difference between the winning bid and the engineer’s estimate. He

also found that a faulty contract management system and inadequate procurement system

were the major reasons for project delay and cost overrun.

In conclusion, this section of the literature review reveals that relationship megaproject

delay and cost overrun and their relationship with the scope of work, scope change and

the contract strategy, bidding process and procurement system. These studies shows that

54

importance of contract strategy for scope of work and success of the project starting from

the preplanning phase of the project lifecycle. Contract, cost estimation based on the scope

of work and work breakdown structure must be considered carefully at the preplanning

phase.


In conclusion, this review of the literature has shown the importance of mega-project

development processes, scope of work vagaries, and contract issues at the preplanning

phase alongside their respective knock-on effects to project lifecycle related objectives;

cost, time, quality and safety. There is somewhat of a lack of literature for big-projects’

preplanning phase research in general and for mega-project preplanning stages

specifically, and indeed it can be suggested that there has yet to be a definite agreement

upon the extent to which mega-projects can be defined with specific definitions that go

beyond a somewhat simplistic ~$1 billion catch-all categorisation. Research, it might be

suggested, still needs to go towards work that explicitly explores traditional Stage-Gate

processes for mega-projects in order to better address scope/scope-changes towards an

overall approach to reducing project cost.

The work above presents an overview of contracts and contractors and stakeholder

concerns and what elements might be factored into (mega) project initiation and

development processes, respective scope(s)/scope(s)-changes and the related increases in

project cost and time impacts. Building upon this body of previous work, this research

develops the current understanding of change-order and scope-change associated with

mega-project processes impacts, towards addressing relationship issues in totality.

55

The following chapter present this work’s methodology to develop new data related to

bettering mega-project engineering-management processes through analysis of a pre-

planning phase evaluation for construction/mining endeavours.

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CHAPTER THREE

3 METHODOLOGY

3.1 Introduction

Research methodology is defined by Strauss and Corbin (1998) as ‘a set of procedures

and techniques for gathering and analysing data’ (p.3). This chapter discusses both

qualitative and quantitative research methodologies, their advantages and disadvantages,

the data collection method of the adopted methodology in order to meet the research

objectives of this study (namely, to better mega-project engineering-management

processes through analysis of a pre-planning phase evaluation for construction/mining

endeavours), discussing also document analysis as an essential part of this methodology,

and finally concluding with discussion of research validity and ethical issues.

3.2 Purpose of Study

Research and development strategies and integrated approaches guide research methods

(Oyeneyin et al, 1996; Matori et al, 2014). This particular research was designed to

evaluate the project management processes used in two mega-projects in Saudi Arabia in

order to devise an improved project management process framework for the mega-project

preplanning, initiation, prefeasibility, feasibility, and construction, delivery and also start-

up phases.

The specific objectives of this research were to:

Determine the process used in the early stages of the two megaprojects;

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Identify the measures used for the (mega)-projects at the early stages to avoid project

life cycle problems and to speed up implementation of project activities without

compromising the quality of work and project;

Determine the factors impeding the effectiveness of the measures;

Determine the personnel’s knowledge in relation to technical tasks;

Ascertain the adequacy of training in the process used;

Determine the type and effectiveness of the megaprojects’ contracts;

Determine the internal and external factors affecting the effectiveness of the

megaprojects’ contracts;

Establish the evaluation techniques used on the megaprojects and their effectiveness ;

Determine the internal and external factors affecting the effectiveness of the

evaluation techniques;

Determine how scope of work, scope change and scope creep were mitigated

Establish how risk was assessed and monitored during the pre-planning and

construction phases;

Establish to what extent technology and software were used and how effective they

were in all the lifecycle stages;

Evaluate the performance of the design teams from pre-planning through to feasibility

stages;

Determine the factors affecting the performance of the design teams from pre-planning

through to feasibility stages;

Determine the function analysis techniques used and their effectiveness;

Establish which factors impeded the effectiveness of the function analysis.

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3.3 Research Methodology

There are three types of research approach: qualitative, quantitative and a mixture of the

two methodologies Creswell (2013). No single research methodology is necessarily ideal

and that selection inevitably involves loss as well as gain (Schulze, 2003). Peter love et

al. (2002) stated that ‘there is no 'perfect' research methodology, as there is no universally

agreed methodology.’ This is because there is still great debate about the meaning of

science (Lee, 1989). The following sections discuss two types of methodologies:

quantitative and qualitative, and the advantages and disadvantages of each methodology.

3.4 Quantitative Methodology

Bryman and Bell (2011) describe quantitative methodology as ‘entailing the collection of

numerical data and as exhibiting a view of the relationship between theory and research

as deductive, a predilection for a natural science approach, and as having an objectivist

conception of social reality’ (p. 150). Harwell (2011) stated that quantitative methodology

inferences from tests of statistical hypotheses lead to general ‘inferences about

characteristics of a population’ (p. 150). He added that it is ‘typically interested in

prediction’ (p. 149).

It is best suited for testing a large population. (Walker 1985; Gill and Johnson 2010). It

uses statistical analysis and focuses on measurement of events (Thomas 2003). Table 3.1

shows the questions the researcher needs to ask in order to determine if quantitative

methodology is the type of methodology to use in his/her research (Leedy and Ormrod

2005, 96):

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Table 3.1: Quantitative methodology distinguishing characteristics

Question Quantitative

What is the purpose of the research? - To explain and predict.

- To confirm and validate.

- To test theory.

What is the nature of the research process? - Focused.

- Known variables.

- Established guidelines.

- Predetermined methods.

- Somewhat context-free

- Detached view

What is the data like, and how is it collected? - Numeric data

- Representative, large sample

- Standardised instruments

How is data analysed to determine its meaning? - Statistical analysis

- Stress on objectivity

- Deductive reasoning

How are the findings communicated? - Numbers

- Statistics, aggregated data

- Formal voice, scientific style

Source: Adapted from (Leedy and Ormrod 2005, 96)

3.5 Advantages and disadvantages of quantitative methodology

Quantitative research focuses on a specific question (Neuman 2010). Data gathering of

quantitative research is highly reliable due to controlled observations, laboratory

experiments, mass surveys, or other form of research manipulations (Balsley 1970). It is

minimizing subjectivity of judgment, and allows for repeated measures of subsequent

performance (Kealey and Protheroe 1996). Quantitative data analysis uses a statistical

approach to test a hypothesis (Miles and Huberman 1994; Taylor and Bogdan 1984).

However, characteristics of people and communities cannot be meaningfully reduced to

numbers or adequately understood without reference to the local context in which people

live (Dudwick et al. 2006, 3). Myers (2008) stated that ‘a major disadvantage of

quantitative research is that, as a general rule, many of the social and cultural aspects of

an organization are lost or are treated in a superficial manner’ (p 8). Lack of skills and

60

resources, too, sometimes make large-scale quantitative research impossible (Dudwick et

al. 2006, 3). Cassell , Dickson and Symon (2001) stated that ‘the chief concern about the

method would be reliability and validity’ (p. 27). It (quantitative methodology) assumes a

single truth and is independent of human perception (Lincoln and Guba 1985).

3.6 Qualitative Methodology

Qualitative research aims to produce factual descriptions based on face-to-face knowledge

of individuals...in their natural settings (p. 196). Creswell (2003) describes qualitative

methodology as ‘one in which the inquirer often makes knowledge claims based primarily

on constructive perspectives...or advocacy/participatory perspectives...or both (p.18). He

(2008) added that it ‘begins with assumptions, a worldview, the possible use of a

theoretical lens, and the study of research problems inquiring into the meaning individuals

or groups ascribe to a social or human problem’ (p.37). Denzin and Lincoln (2000)

comprehensively defined qualitative research as being ‘a situated activity that locates the

observer in the world. It consists of a set of interpretive, material practices that make the

world visible. These practices transform the world. They turn the world into a series of

representations, including field notes, interviews, conversations, photographs, recordings,

and memos to the self…qualitative researchers study things in their natural settings,

attempting to make sense of, or to interpret, phenomena in terms of the meanings people

bring to them’ (p. 3). (Ritchie and Lewis (2003) stated that qualitative research focuses on

understanding rich description and emergent concepts and theories. Walker (1985) stated

that a qualitative research method is concerned with processes of change, complicated

topics and is suitable for small populations. Harwell (2011) stated qualitative methodology

61

focuses on discovering and understanding the experiences, perspectives, and thoughts of

participants' (p. 148).

Qualitative methodology suits strategies of inquiry such as case studies, narratives,

grounded theory study, phenomenology and ethnography (Creswell 2003). He added that

‘the researcher collects open-ended, emerging data with the primary intent of developing

themes from the data’ (p.18). Polonsky and Waller (2005) stated that qualitative data can

be collected from the spoken word, printed word visions, images, forms and structures in

various media, and recorded sound. Patton (1990) stated that written documents could

include organisational excerpts, official reports, memoranda, publications,

correspondence and program records. He divided qualitative research data collection into:

in-depth open ended interviews, direct observation and written documents. Creswell

(2003) divided the data collection procedures into: observations, interviews, documents,

and audio-visual materials. Table 3.2 shows the questions the researcher requires to ask

in order to determine whether or not qualitative methodology is appropriate to use in

his/her research (Leedy and Ormrod 2005, 96):

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Table 3.2: Qualitative methodology distinguishing characteristics

Question

Qualitative

What is the purpose of the research? - To describe and explain

- To explore and interpret

- To build theory

What is the nature of the research process? - Holistic

- Unknown variables

- Flexible guidelines

- Emergent methods

- Context-bound

- Personal view

What is the data like, and how is it collected? - Textual and/or image-based data

- Informative, small sample

- Loosely structured or no standardised

observations and interviews

How is data analysed to determine its meaning? - Search for themes and categories

- Acknowledgement that analysis is

subjective and potentially biased

- Inductive reasoning

How are the findings communicated?

- Words

- Narratives, individual quotes

- Personal voice, literary style

Source: Adapted from (Leedy and Ormrod 2005, 96)

3.7 Advantages and disadvantages of qualitative methodology

Lincoln and Guba (1985) pointed out that both methodologies emphasize truth,

consistency, applicability and neutrality with different procedural approaches to assure

quality. Those who judge qualitative research by standards of quantitative research are

often disappointed, and vice-versa (Neuman 2006, 151).

3.8 The advantages of qualitative research

The advantages of qualitative research can be summarized as follows:

The basic interpretation of qualitative study is seeking to discover and understand

phenomena, process, and the perspectives and worldviews of the people involved

(Merriam 2001);

‘The primary strength of qualitative methodology is the ability to probe for underlying

values, beliefs and assumptions. To gain a full appreciation of an organization, it is

63

necessary to understand what is driving their behaviour’ (Yauch and Steudel 2003,

472);

Peter Love et al. (2002) describes qualitative investigation as ‘an interested in

distilling meaning and understanding phenomenon. Interview, field notes, written

documents and archives are the data collecting methods of qualitative research.

Qualitative research ‘is hypothesis-generating’ (Merriam, 1989, p.20) rather than

serving to test a hypothesis;

‘Qualitative researchers do not narrowly focus on a specific question, but ponder the

theoretical-philosophical paradigm’ (Neuman 2006, p. 15);

The goal of qualitative research focuses on "understanding, discovery, meaning, and

hypothesis generation (Merriam 1998, p. 9);

Qualitative methodologies associated with face to face contact with people, verbal date

and observations. (Peter Love et al. 2002);

It allows the research to study specific issues in detail (Burns 2000, 13; Patton 1990,

14);

‘Qualitative approach ‘inquiry is broad and open-ended, allowing the participants to

raise issues that matter most to them’ (Yauch and Steudel, 2003, 472);

The strength of the qualitative research ‘case study’ approach is in its ability to

examine a ‘full variety of evidence – documents, artifacts, interview, and

observations’ (Yin, 2003, 8).

Qualitative research provides a systematic, empirical strategy for answering questions

about people in their own bounded social context (Peter Love et al. 2002).

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‘The qualitative researcher does not have a preconceived, finite set of issues to

examine’ (Yauch and Steudel 2003: 472);

It suits theory-building and testing a theory (Myers 2008, 23);

It focuses on rich description, understanding and emerging concepts (Ritchie and

Lewis 2003);

It is suitable for small populations, complicated topics and change processes (Walker,

1985);

It provides rich data about situations, people, real life and behaviours (De Vaus 2002,

5);

The findings are ‘generalizable to a large population and to theory but not by sampling

logic’ (Myers 2008, 9);

It has a great advantage over quantitative in that it has the ability to add more details

after ending data collection time Fellows and Liu (2003);

Data of qualitative methodology contain direct opinions, experiences and knowledge

of participants (Patton 1990);

Data analysis creates new concepts and the construction of theoretical interpretations

(Neuman 2006, 15);

Qualitative data analysis described by Wolcott (1994, p. 6) as the “systematic

procedures to identify essential features and relationships.

Qualitative research data analysis is a process of transforming the collected data

through interpretation in order to discover a pattern of meaning, as well as a process

of ‘bringing order, structure, and meaning to a mass of collected data’ (Marshall and

Rossman, 1995, p. 111).

65

The data may reveal subtleties missed by other data collection methods (Burns 2000,

13; Patton 1990, 14);

Its data analysis endeavours to find, understand, describe or create a theoretical

framework (Miles and Huberman 1994; Taylor and Bogdon 1984).

3.9 The disadvantages of qualitative research

The following is a summary of the disadvantages of qualitative research:

‘It is often criticised for lacking generalisability, being too reliant on the subjective

interpretations of researchers and being incapable of replication by subsequent

researchers’ (De Vaus 2002, 5);

‘The major drawbacks associated with qualitative research cultural analysis are (a) the

process is time consuming, and (b) a particular, important issue could be overlooked'

(Yauch and Steudel 2003, 472);

‘All researchers’ interpretations are limited. As positioned subjects, personal

experience and knowledge influence the observation and conclusion. The participants

have more control over the content of the data collected’ (Yauch and Steudel 2003,

473);

‘There are multiple realities based on our construction of that reality (Lincoln and

Guba 1985);

The objectivity of qualitative data is questioned by the researcher of quantitative

approach (Fellows and Liu 2003);

‘Analysis of the qualitative data tends to be considerably more difficult than the

quantitative data, often requiring a lot of filtering, sorting, and other manipulations to

make them suitable for analytic techniques’ (Fellows and Liu 2003, 29);

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Qualitative research may be impacted by limited time of data collection analysis and

interpretation (Thomas 2003);

Data collecting tool is the researcher who may invoke questions of reliability and

validity (Burns 2000, 13; Patton 1990, 14);

To ensure reliability, three strategies were employed in this research: (1) the researcher

provided a detailed explanation of the focus of the study, the researcher role, the

participant’s position and basis for selection (Creswell 2009); (2) multiple methods of data

collection and analysis were to strengthen reliability as well as internal validity (Merriam,

1989); and (3) data collection and analysis process were reported in detail in order to

provide a clear and accurate picture of the methods used in this study (Merriam, 1989).

This research study was not designed to test hypotheses or analyse statistical data. The

main aim of this research was to study and evaluate project preplanning phase issues and

to evaluate ongoing concerns of scope change and issues of change orders from the early

stage of megaproject lifecycle. The sole sources of this kind of information were the

expertise of personnel who were part of the technical and non-technical higher

management and execution teams at the preplanning phase during the implementation of

this phase, and also project documents.

The methodological approach chosen for this research was, therefore, qualitative in order

to obtain expert points of view about the events which had affected the course of the two

megaprojects starting from the preplanning phase, including the project lifecycle,

particularly to examine and evaluate the reasons behind the continuous change orders and

scope of work change of both megaprojects.

Data of two case studies were collected from different chief executive officers, vice

presidents, executives and higher management of the two subsidiaries and a partner of one

67

of the megaprojects. This was achieved by doing semi-structured interviews and two case

studies for two mega-projects processes, with two subsidiaries that worked under the

supervision of the parent company.

3.10 Data Collection

Patton (1990) stated there are three different methods of qualitative research data

collection, namely, interviews, direct observation and written documents. Data for this

research were collected from 15 high profile experts in two public subsidiaries and from

one private partner for one of the two megaprojects. Polkinghorne (1989) recommends

that researchers interview from 5 to 25 expert individuals who know the phenomena. The

following sections discuss the in-depth case study, in-depth interviews and documents of

the data collection.

3.11 In-depth case study

Saunders et al. (2003) divided the research into six stages to include: technique and

procedure, time horizons, choices, strategies, approaches and philosophy. He also divided

the strategies into six categories to include: case study, experiment, survey, action

research, grounded theory, ethnography and archival research.

Case study research is a strategy of inquiry, a methodology and a comprehensive research

strategy (Denzin and Lincoln, 2005; Merriam 1998; Yin 2003). Creswell (2007) defined

case study as ‘a qualitative approach in which the investigator explores a bounded system

(a case) or multiple bounded systems (cases) over time, through detailed, in-depth data

collection involving multiple sources of information (e.g. observations, interviews, audio-

visual materials, and documents and reports), and reports a case description and case-

68

based themes’ (p. 73). It ‘is a heterogeneous activity covering a range of research methods

and techniques, a range of coverage from single-case study through carefully matched

pairs to up to a dozen cases, differing lengths and levels of involvement in organizational

functioning and a range of different types of data analysis’ Hartley 1994, 208; Hartley

2004, 323).

Yin (2003) stated that case study is used to evaluate the ‘why’ and ‘how’ questions of

exploratory research (p. 5). According to Yin (2003) ‘the distinctive need for case studies

arises out of the desire to understand complex social phenomena’ because ‘the case study

method allows investigators to retain the holistic and meaningful characteristics of real-

life events’ (p. 2). Hartley (2004) stated that a case study is useful to understand how

organisational and environmental context impacts on processes. Case study data helps to

identify entity problems and improve solutions (Kothari 2004; Balsley 1970). Thomas

(2003) stated that in case study, the researcher can reveal the interaction of processes that

create entity actions and character.

According to Creswell (2007), there are three types of case studies:

1- Single case study.

2- Collective case study.

3- Intrinsic case study.

In single case study, the researcher focuses on one issue, and then selects one case to

illustrate the issue, while in collective case study, an issue is again selected, but the

inquirer selects multiple case studies to illustrate the issue (Stake 1995). Yin (2003)

suggested that the collective case studies design uses the logic of replication in which the

inquirer replicates the procedures for each case. The third type of case study is an intrinsic

case study in which the focus is on an unusual or unique situation such as evaluating a

69

program and narrative research (Stake 1995). Case studies can have six sources of

evidence: documents, archival records, interviews, direct observation, participant

observation, and physical artifacts (Yin 2003, 83-85-96). Yin (2003) stated that rigorous

data collection follows carefully articulated steps: the use of multiple sources of evidence,

the creation of a case study database, and the maintenance of a chain of evidence. The

reliability of the case study is more important than generalization to other similar cases

(Bell 1999).

3.12 Advantages of case study

It provides in-depth understanding of several cases (Creswell 2007, 74);

It allows to discover and test theories for real life practices (Myers 2008, 82);

It can deal with a variety of evidences, documents, interviews, and observations (Yin

2003, 8);

It used when there is a gap and ambiguity of evident between a context and

phenomenon (Yin 2003, 13);

It is useful when there is an interest in discovering the 'multiple realities' of participants

(Stake 1995, 64);

Useful to understand how organisational and environmental context impacts on

processes (Hartley 2004);

It helps to identify entity problems and improve solutions (Kothari 2004; Balsley

1970);

In case study, the researcher can reveal the interaction of processes that create entity

actions and character (Thomas 2003).

70

Yin (2003) criticised those who said case study provides little basis for scientific

generalization by saying ‘case studies…are generalizable to theoretical propositions and

not to populations or universes. In this sense, the case study… does not represent a

'sample', and in doing a case study, your goal will be to generalize theories (analytical

generalization) and not to enumerate frequencies (statistical generalization) (p. 10).

However, Yin (2003) conceded that there were two disadvantages to case study; it

consumes time and the results can be unreadable. Creswell (1998) suggested steps to

analyse the case study data:

1- Arrange specific facts in a logical order;

2- Categorise data;

3- Examine the relationship of data occurrences;

4- Identify patterns of data interpretation and pattern that criticise the case more broadly

than a single piece of information;

5- Synthesise and generalise conclusions.

Yin (2003) stated that 'no matter what specific analytic strategy or techniques have been

chosen, the researcher must do everything to make sure that the analysis is of the highest

quality', adding that the researcher ‘must be able to develop strong, plausible, and fair

arguments that are supported by the data’ (p. 137)

This research examined lifecycles of two megaproject management processes starting

with the preplanning phase for two public entities that work under the supervision of the

parent company, an aluminium megaproject and a gold megaproject in Saudi Arabia. The

aluminium megaproject is a joint venture fully integrated industrial complex producing

aluminium for domestic and world markets from mine to rolled product. It includes a

mine, alumina refinery, aluminium smelter and a rolling mill. The megaproject complex

71

uses clean power generation, sea port and rail facility. The gold mega-project consists of

five mines, five advanced exploration refineries and properties. The two mega-projects

faced many difficulties during the two megaproject life cycles, leading to delayed project

schedule and increased project budget. Case study data were collected from CEOs, VPs

and executives of the two subsidiaries and one project main partner. Case studies of this

kind can help the researcher to understand the approaches taken by top management when

implementing mega-projects at the preplanning phase.

3.13 In-depth interview

Boyce and Neale (2006) defined in-depth interviews as ‘a qualitative research technique

which involves conducting intensive individual interviews with a small number of

respondents to explore their perspectives on a particular idea, program or situation’ (p. 3).

Kvale (1983) stated that the purpose of the qualitative research interview is 'to gather

descriptions of the life-world of the interviewee with respect to interpretation of the

meaning of the described phenomena' (p. 174). Patton (2002) classified the interview data

collection method into three general categories: the informal, conversational interview;

the general interview guide approach; and the standardized, open-ended interview.

Interviews suitable for complex situations can be divided into three categories:

1- Structured interview (rigid questions, content and structure).

2- Semi-structured interview (elements of both structure and unstructured).

3- Unstructured interview -flexible questions, content and structure- (Patton 1990).

Berg (2009) stated that semi structured interview is designed to collect data by using a set

of predicted and predetermined questions to provoke thoughts and opinions of related

issues. Therefore, in this research the primary data of face to face semi-structured

72

interview (open interview approach with note taking) was designed and incorporating 84

questions in order to determine the circumstance and the events that led to cost overrun

and delay of mega-projects schedule at the project lifecycle including preplanning phase,

design, construction, start-up. The CEO’s of both subsidiaries allowed the interviewees to

support the researcher and to answer the interview questions freely and without

introducing bias in the response. The interview and data collection of both mega-project

processes were supported by official and formal letters from the government, two CEOs’

and university.

3.14 The advantages of interview

The advantages of interview can be summarised in the following points:

The main advantage of interview is the possibility of obtaining comprehensively

detailed primary data (Saunders et al. 2003);

Interview data is rich in information and detail (Denscombe 2004);

Interview is a flexible approach and used widely for in-depth data collection (Robson

2002; King 2004);

It provides participants’ direct opinions, experiences and knowledge (Patton 1990);

Semi-structured interview can be structured for a cross-case comparison (Bell and

Bryman 2007);

There is the probability of instantly validating the data (Denscombe 2004).

However, disadvantages of the interview can be:

Interview research issues must be handled carefully in order to manage interview time

efficiently (Bell and Bryman 2007);

73

Warren (2002) stated that the interviewer must remain focused on the research

questions or objectives in order to ensure the interviewee remain focussed on the

question;

The main disadvantage of the face to face interview is, it is expensive and time-

consuming;

There is the possibility of interviewee bias during the data collection (Engel and Schutt

2009);

Interviewee bias could seriously compromise the validity of the project findings

(Engel and Schutt 2009).

Connaway and Powell (2010, 171) suggested that in order to avoid interviewer bias;

the interviewer does not overreact to responses of the interviewee

Fellows and Liu (2003) Figure 3.1 shows that the differences between questionnaires, case

study and interview in relation to the depth and breadth of the study and the data required.

It demonstrates that the questionnaires cover a large sample without giving in-depth

information; however case studies and interview are deep and focussed to gather the

necessary information.

Figure 3.1: Breadth vs. depth in question-based studies. Source: Fellows and Liu (2003)

74

This research used semi-structured face to face interviews and all interviews were

conducted in a friendly environment and at times and places that suited the interviewees.

The data of this research was in-depth, rich, and from a relatively small population sample.

It dealt with high profile management in order to determine the preplanning process for

two megaprojects and the associated issues of the two lifecycles.

The interviews were held individually with fifteenth executives including three CEOs,

three VPs, five Directors and four managers in four different cities, and for over three

months.

The interviewer started the interviews by visiting the gold company and met the CEO and

directors of gold companies and a VP in two different locations away from each other; the

main business department and the project management department.

After spending a long time with the Western-region gold company the interviewer

travelled to a different city in the centre of the country to meet headquarters higher

management VPs, and director(s) of contracting and procurement. Due to the tight

schedules of executives, the interviewer tried several times to assigned a meeting with

them almost failing; however the researcher persisted and met the director of contracting

and procurement. Moreover the interviewer travelled to two other cities in the East of the

country in order to conduct the interviews with the members of Aluminium mega-project

and one of the mega-project partners. Commencement of the interviews was through

visiting the project partner and meeting the CEO and planning managers who worked for

the project from the preplanning phase and upon gaining a site permit (a not

uncomplicated process in itself) visits and data gathering was carried out at this mega-

project location, conducting interviews with the CEO, directors and managers

respectively.

75

The researcher gave interviewees the time to answer the semi-structured questions without

interruption and genuinely engaged with each interviewee and transcribed important

information during conversations via direct written note taking (due to the confidential

nature of some of the information, recording were agreed as not to be used).. Interviewees

were helpful and provided wherever possible valuable sensitive information for the two

mega-projects’ case-studies, and tried to explain and clarify fine points for each and every

question. Moreover the researcher managed to build up a good relationship with

interviewees over the three months period of interaction allowing a number of re-

confirmations and more importantly validation of both the responses and the

recommendation proposal (as below) for a framework for mega-project improvement with

direct reference to pre-planning factorisation/weighting.

3.15 Interviewee

This research project recognizes: the senior experts representing case-study ‘gold’; the

expert advisers representing case-study ‘aluminum’; and, the expert senior executives

representing case-study ‘headquarters’, all detailed below.

A- Gold subsidiary

Table 3.3 shows six senior directors and managers of the mega-project team of gold.

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Table 3.3: Project team of gold subsidiary

Interviewee Position Experience Client/

Partner

Industry Sector

Interviewee

1

President of gold

Co. & vice president

of Co.

25 years Client Mining Semi- Gov’t

Interviewee

2

Director of new

mines


Interviewee

3

Project director &

execution

18 years Client Mining/Petro-

chemical

Semi- Gov’t

Interviewee

4

Manager of

Engineering

projects & QA/QC


chemical

Semi- Gov’t

Interviewee

5

Mining project

manager


chemical

Semi- Gov’t

Interviewee

6

Manager, project

control & risk

management


chemical

Semi- Gov’t

B- Aluminium subsidiary

Table 3.4 shows six senior directors and managers of the mega-project team of

Aluminium.

Table 3.4: Project team of Aluminium subsidiary


Partner

Industry Sector

Interviewee

7

President of

Aluminum Co.


chemical

Semi-Gov't

Interviewee

8

Deputy project

director

20 years Client Mining/ Oil & Gas Semi-Gov't

Interviewee

9

Deputy project

director

20 years Client Mining/Chemicals Semi-Gov't

Interviewee

10

Financial planning

& analysis manager

14 years Client Mining/Petrochem

ical

Semi-Gov't

Interviewee

11

President of

petrochemical Co.

27 years Partner Petro-chemical Private

Interviewee

12

General manager of

planning

34 years Partner Petrochemical Private

77

C- Corporate Executives or Higher Management (Headquarters details)

Table 3.5 shows that three executives of the two mega-projects at the headquarters.

Table 3.5: Higher management interviewees at the headquarters


Partner

Industry Sector

Interviewee

13

Vice president of

project

Management &

Engineering

34 years Client Mining/

Oil & Gas

Semi-Gov’t

Interviewee

14

Vice president of

corporate Control &

enterprise Risk

management


Oil & Gas

Semi- Gov’t

Interviewee

15

Director contracts &

procurement


3.16 Document Analysis

Yin (2003) recommends different types of information sources for data collection such as

documents, archival records, interviews, direct observations and participant-observations.

Creswell (2009, 185) listed the following analysis steps of qualitative data:

1- Prepare and organise the data for analysis;

2- Prepare the data and information to obtain overall meaning;

3- Read, organise and reflect on the meaning;

4- Code, categorise and label data based on the theoretical approach;

5- Use a narrative passage to generate a description of people and identify themes from

coding and find the connections between the themes;

6- Interconnecting themes and tables;

7- Interpret the more meaning of data and represent the information and data in the report.

Data collection method of the two-megaproject lifecycles such as prefeasibility,

feasibility, construction and start-up, were gathered from documents as well as interviews.

78

Document analysis for this research is undertaken to understand the whole picture of case

studies and include individual official interviews and documents such as technical and

non-technical reports, annual reports, design and drawings documents, specifications,

financial information, work activities and tasks, contract agreements, minutes of meetings,

internal memoranda, booklets, brochures and journal article and newspaper. Moreover

document analysis of this research contained detailed plans of work, design documents,

work activities and tasks, company information, contract agreements, booklets and

brochures. These phases, disciplines, areas, tasks and activities during the two

megaprojects life cycles were divided, categorised and studied carefully. These data and

documents were compared with the interview data to assure validity and to uncover any

differences. The following Table 3.6 describe the procedures supported by the authority.

Table 3.6: The procedures supported by the authorities

Procedure Authority

The two-megaproject lifecycles data;

prefeasibility, feasibility, construction and start-

up data

Documents of both companies including all

interviewees.

Technical and non-technical reports Documents of projects including project

management department for both subsidiaries

including the main contractor.

Individual official correspondence Higher management and project management

team for both of subsidiaries.

Financial information Documents of projects including Financial

planning & analysis manager

Detailed plans of work Documents of projects including Higher

management and CEOs’ of both subsidiaries

including CEO and main partner General manager

of planning

Design documents Documents of projects including Project

management departments of both subsidiaries

including the project management department of

main contractor.

Work activities and tasks Documents of projects of all departments

Company information All Companies

Contract agreements Documents of projects including higher

management including CEOs’ of both companies

including CEOs’ and the planning manager of

main contractor

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Annual reports All companies

Booklets and brochures All Companies

Journal article and newspaper Researcher

3.17 Validity

Validity is defined by Creswell and Clark (2007) as ‘the ability of the researcher to draw

meaningful and accurate conclusions from all of the data in the study’ (p. 146). According

to Leedy and Ormrod (2005), 'the validity and reliability of your measurement instruments

influence the extent to which you can learn something about the phenomenon you are

studying...and the extent to which you can draw meaningful conclusions from your data'

(p.31). In qualitative research credibility, neutrality or confirmability, consistency or

dependability and applicability or transferability are the essential criteria for quality of the

study (Lincoln and Guba 1985).

Trustworthiness is the term used in parallel to validity in qualitative research (Guba 1985;

Lincoln and Guba 1985). Trustworthiness of a research report urged by Lincoln and Guba

(1985) as the heart of issues conventionally discussed as validity and reliability. Guba and

Lincoln (1985) divided trustworthiness into four categories: credibility, transferability,

dependability and confirmability. They proposed that internal validity should be replaced

by that of credibility, external validity by transferability, reliability by dependability and

objectivity by confirmability (Guba and Lincoln 1982). The following sections summarise

the four main categories of trustworthiness.

The researcher's methods involve the ‘use of standardised measures so that the varying

perspectives and experiences of people can be fitted into a limited number of

predetermined response categories to which numbers are assigned" (Patton 2001, 14). He

added that the credibility in quantitative research depends on instrument construction,

80

while in qualitative research, ‘the researcher is the instrument’ (Patton 2001, 14). It

involves establishing the results as credible from the perspective of the participants in the

research (Trochim 2001). Member checking is the most crucial technique for creating

credibility (Lincoln and Guba 1985). In order to create credibility, different sources of

information, including investment of sufficient time by the researcher, create credibility

(Driessen, et al. 2005).

Newman and Ridenour (2008) referred transferability of qualitative research to the ability

of the findings to be generalised to other contexts and not be limited. Seale (1999) claims

that transferability of qualitative research replaces external validity. External validity, ‘is

concerned with the extent to which the findings of one study can be applied to other

situations’ (Merriam, 1998, 207). In order to increase the credibility of qualitative

research for transferability, Lincoln and Guba (1985) suggested the use of thick

description of data.

Dependability is the third way to judge the qualitative research validity or trustworthiness.

Lincoln and Guba (1985) stated that dependability shows the consistency and repeatability

of research. Consistency or stability used over the time of the research inquiry process are

needed for dependability (Golafshani 2003). Lincoln and Guba (1985) stress the close ties

between credibility and dependability in practice and argue that they may be achieved

through the use of individual interview or group focus. Inquiry audits of the research

documents and the report can help the independent auditors to judge the credibility,

transferability and dependability of the research findings (Lincoln and Guba 1985).

Confirmability in qualitative research is defined by Given (2008) as ‘an accurate means

through which to verify the two basic goals of qualitative research: (1) to understand a

phenomenon from the perspective of the research participants and (2) to understand the

81

meaning people give to their experiences and it can be expressed as the degree to which

the results of the study are based on the research purpose and not altered due to research

bias’ (p. 112). Schwandt (1997) stated that confirmability ‘calls for linking assertions,

findings and interpretations and so on to the data themselves in readily discernible ways’

(p. 164). The rigour of qualitative findings is the purpose of ensuring confirmability (Guba

1981; Schwandt, Lincoln, and Guba 2007). Guba and Lincoln and (1985) suggested an

external audit for dependability and confirmability in order to increase the credibility of

qualitative research. Given (2008) stated that ‘an independent reviewer is allowed to

verify the research process and interpretations of the data as consistent on both the

literature and methodological levels (p. 112).

In order to ensure validity the researcher spent more than three months at the company

offices and site to collect data, and was given leave to remain with the interviewees in

order to build up a close relationship and to examine and clarify any misunderstanding in

the data provided of work process during project lifecycle.

In order to achieve research trustworthiness and to ensure its acceptability, prior to

conducting the data collection, the researcher was required to obtain ‘official approvals’

from the heads of the two subsidiaries and an official letter from the government in order

to obtain permission to collect data from staff presumed to have the ability to contribute

their perspectives based on sound knowledge.

The interviewees were selected carefully to target those who had worked during the

preplanning phase of two mega-projects. Research data-gathering timetables sought and

managed to secure interviewees at the appropriate initial stages of the two-mega-projects.

Interview answers obtained from stakeholders who worked for the project from initiation,

in the project management department, financial department, mines, quality control,

82

execution department and respective ‘start-up’ sub-departments. All aspects of the project

lifecycle were covered in the interviews with personnel. Data were analysed and the

transcripts were read twice – the first time to search for the main themes and the second

time to categorise and code the data. Transcripts were written up by using rich and thick

description. The research used different sources of information – two different mega-

projects and also sought data from higher management of the parent company and the

CEO, as well as from the higher management of the project partner (petrochemical firm).

Table 3.7 outlines the strategies undertaken to validate the research against the validation

criteria.

Table 3.7: Summary of Strategies to Validate Research

Qualitative validity

criteria

Strategy Action

Credibility Prolonged Engagement The research mission lasted for more

than three months.

Triangulation Different sources, different questions

and different approaches; Two

mega-projects, two subsiders and

one partner, 3 CEOs’,2 VPs’,

executives, directors managers, and

84 questions

Transferability Use of Thick Description Sufficient detail and full report of

interpretation of findings are

presented for the reader.

Clarification of Bias Unbiased data collection approaches

adopted / supported for the main

source of information (Government

and CEOs’.

Dependability Inquiry Audit Independent examination/validation

of the research process, documents

and interview data, findings,

interpretations, roadmap and

recommendations.

Confirmability Raw Data Two case studies, two mega-

projects, two subsidiaries, one

partner and eighty four questions

and answers for interviewees, all had

checked by the inquiry auditors’.

83

3.18 Ethical Conduct in Research

All Research at Curtin University who are conducted research with or about people, or

their data must conduct it in accordance with the Australian Code for the Responsible

Conduct of Research. Clause 4.2.2 of states that ‘Institutions must maintain a policy that

protects the intellectual property rights of the institution, the researcher, research trainees

and sponsors of the research, as appropriate.’

3.19 Ethical issues

Occasionally the different methods of conducting qualitative research of subjective

industrial projects have ethical issues due to many factors such as the interview itself, the

nature of collecting data, and researcher interpretation (Pasian 2015). Pasian stated that a

list of ethical considerations include obtaining the informal consent of participants,

safeguarding employee matters, safeguarding against bias in interpreting the data,

installing protective measurements to safeguard employees against being fired for

participating in research, asking effective questions, not drawing conclusions from a

general case, applying critical thinking in all research analysis and interpretation (Pasian

2015, 146).

Generally, the key ethical issues that arise during data collection or interviewing, are due

to sensitivity of information, and in this qualitative research and prior to the interview, the

researcher sent official requests to the CEOs of the two public mega-projects and a

confidentiality agreement was put in place among the university, the researcher and the

two companies. Moreover, the researcher also obtained an official permission from the

government supporting the research for three months. The assistants of the two CEOs

were instructed to provide all necessary information for the researcher. A copy of the

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research findings was promised to the government at the end of the research. Thus the

researcher assured the interviewees that the companies’ rights and matters would be

safeguarded and confidentiality would be maintained. The interviewees were also assured

that they and the company would remain anonymous. And to ensure anonymity,

interviewees were given generic aliases. The interviewees were also informed that their

participation in the study was voluntary and they could withdraw from the study at any

time.

3.20 Chapter conclusion

This study utilised qualitative methods of data collection to evaluate the mega project

management process being applied in two public mega-projects at the project

development phase in Saudi Arabia. These two mega projects were researched as two case

studies, in which the interviews with higher management engaged in megaprojects

preplanning phase and review of documents were combined to generate a megaproject

roadmap from the preplanning phase. The data from two mega-projects for the same

company, in different locations, with different management, contractors and documents

allowed comparison and contrast between the two case studies.

85

CHAPTER FOUR

4 INTERVIEW ANALYSIS

4.1 Interviewee Details

Interviewees from the gold subsidiary, the aluminum subsidiary and headquarters were

asked to provide information on their position, experience, department and involvement

in the mega-project. This information is summarized in Table 4.1, Table 4.2 and Table 4.3

respectively.

Part 1: Gold Subsidiary (Projects team details)

Six senior directors and managers of the project team were asked a series of questions

about the Mega-project’s development and execution phases.

Table 4.1: Project team of gold subsidiary


Partner

Industry Sector

Interviewee

1

President of gold

Co. & vice

president of Co.


Interviewee

2

Director of new

mines


Interviewee

3

Project director &

execution


chemical

Semi- Gov’t

Interviewee

4

Manager of

Engineering

projects &

QA/QC


chemical

Semi- Gov’t

Interviewee

5

Mining project

manager


chemical

Semi- Gov’t

Interviewee

6

Manager, project

control & risk

management


chemical

Semi- Gov’t

86

Part 2: Aluminum Subsidiary (Project team details)

Eight senior directors and managers of planning and executing project management team

were asked a series of questions about the Mega-project development and execution

phases.

Table 4.2: Project team of aluminum subsidiary


Partner

Industry Sector

Interviewee

7

President of

Aluminum Co.


chemical

Semi-Gov't

Interviewee

8

Deputy project

director

20 years Client Mining/ Oil & Gas Semi-Gov't

Interviewee

9

Deputy project

director

20 years Client Mining/Chemicals Semi-Gov't

Interviewee

10

Financial planning

& analysis

manager

14 years Client Mining/Petrochemic

al

Semi-Gov't

Interviewee

11

President of

petrochemical Co.

27 years Partner Petro-chemical Private

Interviewee

12

General manager

of planning

34 years Partner Petrochemical Private

Part 3: Corporate Executives or Higher Management (Headquarters details)

Three executives were asked random questions about the Mega-project’s lifecycles.

Table 4.3: Higher management interviewees at the headquarters.


Partner

Industry Sector

Interviewee

13

Vice president of

project

Management &

Engineering


Oil & Gas

Semi-Gov’t

Interviewee

14

Vice president of

corporate Control

& enterprise Risk

management


Oil & Gas

Semi- Gov’t

Interviewee

15

Director contracts

& procurement


87

4.2 Interviewee Question and Response

The following tables represent the questions that given to the interviewees of the gold

subsidiary (interviewee 1 to interviewee 5), the aluminum subsidiary (interviewee 6-

interviewee 12) and the headquarters (interviewee 13-interviewee15), and their responses.

4.2.1 Traditional project management and stage-gate processes

Table 4.4: Responses

Table 4.4: Responses to traditional project management and stage-gate processes

project concept and prefeasibility -gate process at the Mega-w did you evaluate the stage1. Ho

phase?

-We have just started implementing stage-gate process in the company; however

we used its process to evaluate the three stages of the design processes with the

design contractor.

-Stage-gate process used at project basic design stage in the prefeasibility phase.

-Stage-gate management approval for project basic design (3D HAZOP) stages

took from one month to two months each review stage represents: Design (30%)

then Design (60%) then Design (90%).

-Stage-gate process will be applied on all future projects but the theoretical process

needs modification to suit the mining sector and specifically our company.

Interviewee 1

-Stage-gate process is not well identified.

-Stage-gate process consumes a long time for analysis, evaluation and finally the

final approval of board members which took long time to obtain their signatures.

Interviewee 2

-Stage-gate approval was the main cause for change orders.

--Stage-gate team lacked of technical experience and needed to study all the

aspects of the stage before evaluating them in an independent peer review.

Interviewee 3

-Stage-gate review was important and should include the whole stakeholders such

as the project team, contractor, owner and operations.

- -Stage-gate workshop and process covers economic parameters such as IRR,

ROI & PV value engineering and HAZOPS.

Interviewee 4

-Stage-gate was a good tool and all stakeholders must involve in the process and

evaluation.

Interviewee 5

No answer was given Interviewee 6

-Stage-gate should link to the right department.

-We did not use stage-gate process at early phases since we had small project

management team at the prefeasibility stage of the project and the main project

management contractor took the responsibilities of project supervision.

Interviewee 7

88

We did not used it except in the design stage but the contractor did during the

project life processes.

Interviewee 8



We did not used stage-gate project instead we used the traditional project

management since we have small project management team.

Interviewee 11

We did not deal with stage-gate project at the project prefeasibility stage, the

reason was that the stage-gate review consumes project time (signature of the

board members). Instead we used regular meetings, PowerPoint slides, project

cost estimation and project daily follow up.

Interviewee 12

We just introduced stage-gate process to the company and still working on

traditional project management.

Interviewee 13

We used traditional project management and moving toward stage-gate process Interviewee 14


4.2.2 Mega-project scope of work and scope creep

Table 2: Responses

Table 4.5: Responses to Mega-project scope of work and scope creep

2. How did you evaluate scope and scope creep?

Inaccurate of ore data-base (quantity and quality) and basic design problem at the

early stages caused a scope creep.

Interviewee 1

-Scope creep arises from basic engineering packages, we spend a lot of efforts

during this stage.

-Well project definition and scope of work will minimize the scope-change.

-We changed scope order once or twice a month for 22 months project.

-Scope of work was the main on-going costs of project.

Interviewee 2

-The major cause of scope creep was the owner.

-Contract award selective based on low price and this hurts the scope and lead to

change it.

-Different thoughts and concepts for project team.

Interviewee 3

Scope definition is not clear. Interviewee 4

Project owner must define project scope properly. Interviewee 5

-Contractor or consultant that did the design offshore and did not know the actual

local market properly caused a scope creep. Interviewee 6

-Contractor and subcontractor.

-Project team.

Interviewee 7

-Number of awarded change order, after award of contract is a good tool to show

how good the scope was described and how much is the scope creep. Interviewee 8

89

-To reduce the scope creep, we need owner must defined the scope of work

properly.

-We changed the scope more than 5 times during construction phase and many

times during basic/detailed engineering.

-Project scope creep caused a major continuing cost.

-Lack of authority cooperation.

-Project interfaces.

-Licenses (labor, location, etc.).

-Contractor and subcontractor.

Interviewee 9

-Site condition.

-Utilities.

-Services.

-Contractor.

-Lack of expertise.

-Transformation from project to operation.

-Inaccurate cost estimation from the contractor.

-Owner change order at the construction phase (to increase the capacity).

Interviewee 10

-The technology provider is the best entity that can do the project basic

engineering if you want to avoid and scope creep.

-Inaccurate project information at the beginning of the project.

-Unstable of water, electricity and gas supplies.

-Inaccurate raw material information.

-Inaccurate basic design.

-Unproven technology.

-Kind of contract.

-Bank loan.

-Project team.

-Sometimes partnership.

-Contractor and suppliers.

Interviewee 11

-Stage-gate process and board approval Interviewee 12

90

-Strategy and type of contract

-Partnership with technology provider.

-Complexity of project procedures

-Project team

-Neglecting in failing to follow-up a project on daily-basis

-Project loan.

-Change management.

-Contractor.

Interviewee 13

-Poor planning.

-Vendors and suppliers.

Interviewee 14

-When scope is unknown like project engineering rate then we can use unit rate

contract.

-Contract strategy could lead to scope creep.

Interviewee 15

4.2.3 Contract strategy and award mechanism

Table (3): Responses

Table 4.6: Responses to contract strategy and award mechanism

3. Was the current contract award mechanism in your company Effective?

-No it was not, the contract types used were EPCM: open for plant, EPC: close for

roads and small jobs.

-Company follows contract awards procedure to choose the winner but there were

a problem with the clauses and contract type itself.

Interviewee 1

-We had a problem with the main contractor award.

-EPC type of the contract was the most used not EPCM.

-Main contract award has a problem.

-The traditional procurement contract (Design-Bid-Build) was not effective and

needs for improvement.

Interviewee 2

-Contract award selection system based on the low price and this hurts the scope

and led to changed it.

-EPCM type of contract is not successful in this country.

-We put unrealistic time condition in the contract clauses.

-Contract structure/strategy is a big problem.

-Contract type wasn’t a problem with subcontractors.

Interviewee 3

91

-Project execution time should starts from the time of signing the contract without

any delay.

-Contract bidding process took long time and in this project took 7 months.

-Contract clauses did not included the communication language with Asian

companies that did not follow international technical standards.

-Contract clauses did not included milestone communication between the owner

and main EPC contractor.

-EPCM type of contract has many change ordered.

Interviewee 4

-There was a delaying in contract award caused a project delaying.

-The main contractor and contract caused serious problems.

-We had two kinds of contracting strategies which were EPC and EPCM

contracts.

-In EPC contract, the full risk lays on the contractor but we can’t change any

order after we signed the contract.

-In EPCM contract, the design was the responsibility of the contractor and in

cause of delivery delay, it could cost us many things.

Interviewee 5

Contract strategy is essential and must be considered to avoid project lifecycle

problems.

Interviewee 6

Yes it was effective but facing some difficulties. Interviewee 7

-Most of the new complex mega-project contracts in this country are EPCM or

EPC contracts.

-For services and small jobs EPC or LSTK were preferred in this country.

However the drawback of LSTK was the price fixed and we could not change

order after signing the contract. Moreover the owner could not interfere in the

contractor work.

-The cost of change order in EPC/ LSTK contract higher than change order cost

for EPCM contract.

-We had two EPCM contracts with leading companies to build Smelter and

battery limits, two EPC contracts for mine and refinery and one LSTK contract

for roll milling.

-Traditional procurement contract system was not effective due to the Interests

and relationships that affect the decision-making.

-Contract award focused on the lowest price.

Interviewee 8

-One of the major risks that we had faced in this project is the EPC/ LSTK

contractor who declared bankrupt in the middle of construction phase.

Interviewee 9

-The Mega-project design packages were distributed among three companies and

under the supervision of the main contractor.

-The cost of smelter project was so high, therefore EPCM was the best contract

type.

Interviewee 10

92

-Contracts prices were high.

-Salary contracts of expert engineers were high.

-Contractors spending forecast was important for project in order to estimate

project cost.

-Project cost estimation changes depended on the kind of contract. When the

company changed orders or changed the scope for a new project view that cost it a

fortune but they needed it.

-EPC contract has part of project operation responsibility. Mechanical completion

usually have delayed for this sort of contract. Interviewee 11

-Contract characteristics:

Don't squeeze contract.

Money-wise.

Schedule-wise.

Project builds within -+10 of the project time.

Interviewee 12

No answer were given. Interviewee 13

-For project success board executives must considered the right people, contract

type, contractors and subcontractors.

-Contract award based on the low bidder price.

Interviewee 14

-We use two major contract EPCM/EPC and unit rate contract.

-EPC contract: general in this country, performance guaranteed but it needs well

study and risk registry.

-EPC/LSTK contract costs more but with law risk and low labor cost.

-EPCM/LSTK contract: it needs a full project details. It has project supervision

with high labor cost.

-Unit rate contract: when the scope unknown like engineering rate and the

quantity not estimated.

-Performance guarantee is an important clause which must be contained in the

contract before you sign it.

-Project liability is shared between EPC contractor and the owner.

-The most Important contract clauses for mega-project are:

Performance guarantee.

Governor Law.

Attribution rule.

Insurance.

Acceptance and testing.

Change in market.

Variation procedure.

-Factors are affecting on type of contract are:

Time.

Team.

Market, i.e. booming.

Location.

Weather.

Quality.

Interviewee 15

93

4.2.4 Basic engineering design and detailed engineering design phases


Table 4.7: Responses to basic engineering design and detailed engineering design phases

4. Had you ever faced difficulties during design stage or Front-end Engineering design? And

why?

Yes, because of design contractor, the main contractor and lack of internal

technical expertise. Interviewee 1

-Yes, design was the second most important phase for the project after

calculating ore quantities, it took a long time since we implemented it on three

stages for the basic engineering and it needed design confirmation.

-Due to the limitation of project management team, we faced problems in basic

design during the prefeasibility phase which led into many problems of detailed

engineering during the feasibility phase.

-Contractor/designer caused the design problem.

-Lack of technical expertise increased the chance of design problems.

-The allocation for front end engineering, design and planning from overall

capital cost of the project was 30%.

-It is important for basic engineering and detailed engineering to use value

engineering.

-Contractor handled everything since most of the project contracts were either

TLSK or EPC. However we still did three stages of design review with the

contractor.

-It is extremely important to have accurate weather information before doing the

design phase.

-Technology provider, design firm and project team were responsible for

conducting design changes in the initiation phase.

-Lack of internal value management team caused design problems.

Interviewee 2

-We needed a strong project management team to follow up the design phase

with the awarded design company, schedule and time.

Interviewee 3

-Yes we had many design problems due to shortage of project management team

that follow up design process with contractor offshore.

-Design process took long time.

Interviewee 4

-In EPCM contract, the design is one of the responsibilities of the contractor and

in case of delivery delay, it cost us many things.

-Design problems and modification caused a delaying a call of construction

bidding.

-There were many consequences of delaying the contract award especially at the

design stage.

Interviewee 5

94

-Design company cut corners and copy paste old projects without review the bid

conditions.

-Design company rushed everything up to submit the design during the time

frame which was took three months.

-Design company did no plan the design properly during biding time.

-Value management was important for design stage but needs qualified people to

evaluate the value of the items not reducing the cost.

-Value engineering workshop done after receiving the design from the contractor

and implemented on three stages.

-There were internal value management team and external value team

(consultant) including the contractor or the designer.

No answer were given Interviewee 6


-Yes, we have 40 detailed engineering packages in different times and 50 million

man hours.

-We faced many design problems.

-The allocation for front end engineering, design and planning from overall

capital cost was 10%.

-Usually the design phased take long time due to many complicated factors and

in our mega-project it exceeded the expected time.

-We used value engineering for the design stage in the prefeasibility phase.

-Construction team input and experience needs to be taken into consideration

during the design phase.

-It is important to have accurate weather information for design and after project

start-up phase especially with the changing of weather globally (Global

warming).

-Design modification was the responsibility of the project management team and

main contractor.

-Construction, operation and maintenance teams must be in the loop of

information of design from the early stage of the project.

Interviewee 8

Design packages had distributed among the three companies and under the

supervision of the main contractor. Interviewee 9


Any problem happened during the basic engineering or frontend engineering

design phase resulted in an impact on detailed engineering. Interviewee 11



All stakeholders input and feedback, experience were needed and essential for

design phase and it must be immediately after signing the contract. Interviewee 14


95

4.2.5 Software and tools at the project early stages


Table 4.8: Responses to software and tools at the project early stages

5: Did you use software/tools in the project early stages?

We had a mining software program but it was not accurate and the main

contractor took the charge to calculate the quantity and quality of raw material. Interviewee 1

-Mining software program to calculate the ore, designer/contractor provided the

project with 3D simulation software program for construction and buildings and

AutoCAD.

-There were many barriers that hinder use of software tools within the project.

-Mining software programs were very expensive.

-We faced difficulties due to inaccurate raw material information and inaccurate

software programs/tools.

-We need accurate and reliable cost estimation software programs in the mining

field.

-We need for a User-friendly mining software programs.

Interviewee 2

-AutoCAD, 3D design, value management tools, risk tools, cost estimation tools.

-We had problem with the financing program.

Interviewee 3

Quality tools, AutoCAD, cost estimation tools, value management tools, risk

tools. Interviewee 4

3D simulation program provided by the designer, AutoCAD, value management

tools, cost estimation tools. Interviewee 5

Risk tools, mining tools, and Financial tools. Interviewee 6

Cost estimation tool is the most important tool for decision maker during project

lifecycle. Interviewee 7

-Various tools and programs. The technology licenser or nominated design

company for example provided the project with 3D simulation design.

-We had ‘Monte Carlo’ simulation program for a cost risk quantitative analysis

and to show possible outcome.

-‘sisk registry’ also is a way to divide the whole project into small parts then

identify possible risks.

-The problem of using software program was the involvement of many players

(stakeholders) with different software programs.

-The cost of software programs or project tools was relatively very small

compared to the overall project cost.

-‘Matman’ is Fluor system for tracking procurement of mega-projects.

Interviewee 8

96

-Drawbacks of using software programs are data require to be maintained

regularly, otherwise the tool will not be effective.

-Benefits of using software programs are that all of the information is available

at the press of a button.

-Cost estimation accuracy was the main tool to track the project specifically

during the construction phase.

Variant tools in every technical and non-technical discipline. Interviewee 9

Cost estimation tool is the benchmark which is the comparison and market study. Interviewee 10

-The accuracy of feedstock or ore deposit quality and quantity should be very

close to actual cost. Therefore we need accurate software/tool in the mining

field.

-For mining sector, banks want proven document for the quantities of raw

materials and project life expectancy.

Interviewee 11

Traditional project management tools were sufficient to implement the project

such as PowerPoint slides, project cost estimation and project daily follow up.

However we still need an accurate ore quantity tools.

Interviewee 12

No answer was provided Interviewee 13

-We have a well-equipped company with all the needs that assist the departments

to making decisions.

-Yes, the contractor provided 3D building modelling at the concept and

prefeasibility stage. We used AutoCAD, mining software programs, financial

tools, risk tools, cost estimation tools.

-The cost of software programs is high but If we measured the cost of tools on

the size of the project then it considered low

--Profit and cost estimation are the most important thing for any business.

Therefore directors must have the accurate information to make their decision,

measure the gross margin, making optimal choices and valuing the assets based

on it.

Interviewee 14

-Negotiation is the tool of the contractual strategy.

-Procurement tool was one of the contractor main responsibilities and used to

track procurement at construction phase.

Interviewee 15

4.2.6 Value engineering or value management at the design stage


Table 4.9: Responses to value engineering or value management at the design stage

6: Did you use value management in your organization during prefeasibility stage? If so, how

did you use it?

We used value engineering and we have value engineering standards. Interviewee 1

-Yes, indoor and outdoor teams.

-We used it during the three stages of engineering design.

Interviewee 2

97

-It is an important tool for basic engineering and detailed engineering.

No answer was given. Interviewee 3

Value management team had a lack experience in value engineering. Interviewee 4

-Value engineering workshops did after the design on three stages to evaluate

project items/functions with best cost.

-Value engineering for design review was important but it did not included the

whole stakeholders.

-Value engineering workshops covers economic parameters.

Interviewee 5



-Yes, 51% to 75%.

-It is an important for the mega-project and we used it from the early stages of the

project lifecycle to reduce the cost and increased the value of the items function.

-We used it starting from the design phase.

-Value management tool was workshops.

Interviewee 8



-Value engineering evaluation was a hurdle for projects.

-Value engineering workshops should be value focused not cost cut.

-Value engineering should improve and optimize the project items.

Interviewee 11



-As a business unit we don’t use it.

-As a new company we need to work closely with expert people in every field

both internally and externally especially during prefeasibility and planning stages.

Interviewee 14


4.2.7 Mega-engineering project; cost estimation


Table 4.10: Responses to Mega-engineering project; cost estimation

7: Could you evaluate type of accuracy and reliability of cost estimation and technique?


-We needed an accurate and reliable cost estimation for mine and mine equipment

to construct the project. These information needs accurate resources, budget and

expertise to make decision. Without the accuracy of cost estimating the project

will face difficulties.

Interviewee 2

98

-Cost estimation technique was effective and it was one of the responsibilities of

the main contractor.



Delay of submission of project design packages from the contractor caused an

increased in project cost. Interviewee 5


-Monthly cost estimation (under or over) was one of the most important

parameters to measure the progress of mega-project.

-Project owner should provide the main mega-project contractor (EPCM) with a

monthly cost estimation as a reliable benchmark.

Interviewee 7

-Cost estimation accuracy is the main tool to track the project specifically during

the construction phase when many contractors involved in the construction

activities.

-At the beginning of project life cycle we used previous project cost estimation

report for items, technology and accurate cost estimation for the ore.

-The cost of mega-project was too high.

-The cost of change order in LSTK contract higher than change order cost of

EPCM contract.

-Project cost overrun happened due to the lack of higher authority cooperation.

-Monte Carlo simulation is a cost risk quantitative analysis to show possible

outcome

Interviewee 8


-CEO wants to see cost estimation report every six months before the construction

phase and fortnightly report during the construction activities to avoid any over

cost due to change order.

-During construction activities, the contractors were the main source for cost

estimation.

-If all the projects that belongs to a mega-project started at once it could cause

cost inflation in prices.

-Project cost estimation depends largely on the information that provided by the

project directors, and project director. In return directors and project director

depends on contractors spending forecast to estimate project cost during the

construction phase.

-Change of cost estimation depends on the type of the project contract.

-Project Cost estimation tool was the comparison and market study.

-One of the responsibility of the main contractor was reviewing the project cost.

-The cost of the contractors was high due to the site condition.

-The aluminum low prices globally which happened recently caused to shut down

many smelters around the world due to the costs prohibitive to this kind of project

and due to the rising of energy prices.

Interviewee 10

99


-Cost estimation from previous projects is suffice for prefeasibility study.

-We used regular cost estimation during project lifecycle.

Interviewee 12

Interviewee 13

-Profit and cost estimation are the most important thing for any business.

Therefore directors must have the accurate information to make their decision,

measure the gross margin, making optimal choices and valuing the assets based

on it.

-Using accurate cost estimation helps us to see project details and manage the

projects successfully by assigning resources, build schedule.

Interviewee 14

-The accuracy of mining ore cost should be very close to actual cost.

-EPC contract costs more and with low labor cost.

-EPCM/LSTK contract had a high labor cost.

Interviewee 15

4.2.8 Mega-engineering projects; function analysis


Table 4.11: Responses to Mega-engineering project; function analysis

8: What methods did you use to carry out the project during the conceptual and prefeasibility

phases? , and time used to implement it?


-Meetings and workshops.

-We spent 30% of project time during early stages on function analysis.

-We had cases that did not used function analysis and we discovered that during

construction phase. However with or without function analysis we had to a find

way out to take the project to the next level especially during construction phase.

-Numerical analysis and data evaluation were the techniques used to compare the

alternatives.

Interviewee 2

Financial model analysis should be around +-10 before send it to project

management department. Interviewee 3


Cost evaluation workshops of project items or project functions had done after

each stage of design phases. Interviewee 5



-Workshops varied according to the needs of the project.

-the percentage of time we did spend on function analysis was 26% to 50% in the

early stage.

-Sometimes external stakeholders and project objectives dictate requirements that

have to be met regardless of the analysis.

Interviewee 8

100

-Life cycle cost models were one of the project function analysis.

-Comparative evaluation were the technique used for function analysis to compare

the alternatives.



By comparison of previous items. Interviewee 11



Workshops. Interviewee 14


4.2.9 Mega-engineering project; team during conceptual or initiation phase


Table 4.12: Responses to Mega-engineering project; team during conceptual or initiation phase

9: Who, generally, was responsible for carrying out the project during conceptual/initiation

and planning phases?

Project execution team managed by two authorities. Interviewee 1

-We had teams under the management of contractors for design, to collect the raw

material data and for project construction.

-Internal Project team, technology provider team and design contractor were

responsible for conducting the design changes.

-Our project management team was very small.

-As an operation company, we needed operators and people to run the project

after construction phase. However the main contractor teams handled the project

activities from concept to execution phase under our supervision.

-The prefeasibility and planning stages were conducted by an external team due to

the lack of an expert internal project management team in the design, value

management and supervision.

-We did not have a design team.

-Technical teams, all contractors, construction team, operation team and

maintenance team should be part of the design change team at early project

stages.

-Most of the teams did not have the mining background knowledge and

terminologies.

Interviewee 2

A strong engineering team to follow up the design and schedule is important for

some kind of contracts such as EPCM contract. Interviewee 3

Internal project management team had a lack experience in engineering design

and value engineering. Interviewee 4


101

Operation team did not participated with the internal and external project teams in

the design phase at the early stage of the project. Interviewee 6


-We had five main international contractors for each project and one of them was

the project team leader.

-Design changed were one of the responsibilities of internal and external project

management team and the main contractor.

-80 to 120 person were representing the project management team at the

construction phase.

-It is very important to have expert engineers in every field during the mega-

project life cycle and especially when you have to deal with many companies,

contractors and different authorities.

-Our project was a new, complex and unique and we had neither the technology

nor the experience to run such a mega-project.

-We had a massive mega-project and seriously we had a lack of team work during

the construction phase.

-Design team must be in the loop of information with construction and operation

from the early stage of the project.

-All parties and departments such as engineering, construction management,

operations and maintenance must joined design team.

-Project team had impacted on the effectiveness of project and process.

Interviewee 8


We worked with five companies and every company had a project team that

represented the owner and main contractor, and all of the five projects teams were

working under the instruction of mega-project main contractor.

Interviewee 10


-Project management teams were technical and non-technical.

-Honesty and integrity of team members and top management are important to

implementing the projects.

-Teams members most make everything simple and then follow it up.

Interviewee 12

-Mega-projects attracted expertise more than money. They need to fill up their

C.Vs with broad experience. Interviewee 13

-Project management team is very important due the newness of the industry in

the country.

-We had many projects with different sizes in each subsidiary.

-We had external project management team but internal to the owner.

-As a new company we need to work closely with expert people in every field

both internally and externally especially during prefeasibility and planning stages.

--It is very important for any business to have expertise in every department.

Interviewee 14


102

4.2.10 Mega-engineering project; market condition and external factors


Table 4.13: Responses to Mega-engineering project; market condition and external factors

10: How did you evaluate the market condition and external factors during project early

stages?

-We driven by market and have a long-term product. Interviewee 1

-We are a national gold company and don’t have competitors locally.

-It is extremely important to have the mining ore and financial support and

without them we cannot do anything.

-Government regulation and authorities support may either hinder the progress of

the project implementation or boost it. We faced difficulties in this matter

especially in obtaining licenses and manpower systems.

Interviewee 2

Subcontractors and shortage of manpower were another hurdle that faced the

project due to the regional market booming. Interviewee 3

Market booming caused a mobilization difficulties to remote area for the

contractors. Interviewee 4

-Due to a regional market booming in construction, the company faced obstacles

in finding:

-Construction companies.

-Subcontractors.

-Fabricators.

-Manpower such as discipline engineers and project engineers

-Qualified experts in mining field to supervise and managing new projects.

-Due to a regional market booming, we were forced to deal with Asian companies

due to the engagement of large international construction companies with another

local and international contracts.

-Most of the construction activities face delaying because of the shortage in

qualified manpower.

Interviewee 5

Contractor lack of local market knowledge of contractor caused project delay. Interviewee 6

Our company is an operational company that driven by opportunity and we have a

long-term product. Interviewee 7

-We don’t have a local competitor since it is a new industry in this country.

-Building up a massive mega-project that contains plants, roads, buildings, train,

sea port, electric energy was in need to massive resources in every field such as

human, technology, ore, financial and so on from the beginning of concept phase

until delivering the final product.

-Government regulation was very important and could cause a serious problem

especially at the beginning of the project and in the mid of construction phase.

-At the beginning of the project we had problem with issuing the project licenses

and the interface problems with four or five authorities around the project

location, and in the mid of the project the government change the labor law and

Interviewee 8

103

this decision caused a serious problem for our subcontractors during the

construction phase.

-Authority cooperation had impacted on the project progress.

-Political stability is an extremely important for new industry and especially for

mega-project.

-Political stability is very important for the company that does not own the

technology and have expertise.


-Market study was an important for cost estimation.

-Market booming led to increase contracts price.

Interviewee 10



Mining projects were a new market for this country. Interviewee 13

-Mining company owned by 50% public and 50% government.

-We are a mining company and listed in the stock exchange market, we have the

natural resources and the support of the shareholders. Therefore we are working

now on building up our name and brand.

-We have an international competitors for all of our products and we work with

them to support our product and to find a foothold in the global market.

-Regarding the products we have our market and marketing system to distribute

our product around the world.

-Government regulation and cooperation are an extremely important to implement

projects.

-Economic and political stability of any country is a major catalyst for

international companies, investors and expertise.

Interviewee 14

-Change in market was one of the most important contract clauses for mega-

projects.

-Market was one of the factors that affecting on choosing the type of contract.

Interviewee 15

4.2.11 Mega-engineering project; location and logistics


Table 4.14: Responses to Mega-engineering project; location and logistics

11: Could you evaluate the project location and logistics?

-We had location utility problems, logistics and mobilization as well Interviewee 1

-We faced serious difficulties with the location, utilities, logistics and

mobilization of manpower to the location.

Interviewee 2

104

-The location of the project and logistics were two of many factors that affected

on the success of the project.




The major risks of project construction in mining field were project location

(remote area) and the logistics. Interviewee 6


-Our project was an integrated complex (from mine to port) located in the remote

area and lacks all the necessities of life.

-The mine also located far away from the location of plants and sea port. We

faced risks and difficulties in everything from roads to electricity to water to

manpower and so on.

-Logistics and facilities were one of the factors that affected on the success of the

project.

Interviewee 8

-We had faced communication hurdles with the herders or the indigenous people

who had considered as the neighbor of the project.

-we had faced interface difficulties with five governmental authorities around the

project location and resulted in to bear an additional expenditure on the project

during the construction phase.

-Location licenses

Interviewee 9





-It is extremely important to have a project next to the facilities and resources, but

in mining project all of the ore located in the remote areas. Interviewee 14

Project location affected on choosing contract type. Interviewee 15

4.2.12 Mega-engineering project; linguistic diverse and internal culture


Table 4.15: Responses to Mega-engineering project; linguistic diverse and internal culture

ress?12: How did you evaluate culture impact on the project prog

We faced communication difficulties with Asian companies. Interviewee 1

-The culture within the organization during the product development stage is a

very important factor in project success. We worked closely with different

international companies that has different languages and cultures. The contract

and international technical standards were the sole communication language.

-It is important to set up management plan in the workplace for project culture

diversity especially when you deal with contractors and subcontractors in a

remote area.

-The communication language during the project implementation must be the

international technical and non-technical standards. We faced communication

Interviewee 2

105

difficulties to deal with Chinese and Korean companies since they were not

dealing with these international standards.


Asian companies had English language barrier and understanding international

technical standards. Interviewee 4

Facilitate communication with other departments and contractor was one of the

owner responsibilities. Interviewee 5



-Cultural Factors had impacted on the effectiveness of project process due to the

diversity of work, companies, contracts and projects teams.

-Internal company culture had positive or negative impacts on the project

progression when there are many contractors, subcontractors, vendors, suppliers

and fabricators involve from all over the world. However since most of the people

who worked for this project were expertise, the impact was positively except in

communication between departments.

Interviewee 8


No answer was given. Interviewee

10


11


12


13

-We had dealt with different companies, countries and worked based on the

international standards.

-Culture diversity is important element for our company since we have different

products and projects, and we are in need to expertise in different fields.

Interviewee

14


15

4.2.13 Mega-engineering project in the mining field


Table 4.16: Responses to Mega-engineering project in the mining field

13: What is the mega-project and did your mega-project have a clear theoretical and

professional image?

-We have 8 mining projects.

-Cost and size define the mega-project.

-Our mega-project theoretical image was not clear

Interviewee 1

-You can visualize meg-project but it’s hard to implement it without the support

of the technology providers.

-Difficulties, technology used, and budget can defined the mega-project.

-Meg-project was driven by technology, experience and professional people in the

mining field.

Interviewee 2

106

-Mega-project in mining field measured by mineral resource (ore) and project

definition.

-Project delivery type was just-in-time delivery and parallel workflow models.






-Our Aluminum project capital cost was $10.8.

-The image of mega-project stays ambiguous if we don’t have experts and leading

companies in the same field.

-Mega-project can be defined by the size of the project, parties involved, capital

project and technology involved.

-Mega-project driven by engineering expertise.

-Mega-project in the mining field at early stages measured by availability of

resources, project scope and weekly monitored to adjust and any deviation from

baseline.

-Our project delivery used project management sequential.

Interviewee 8


Project budget was 10.8 billion dollar. Interviewee 10




-We have around 10 projects some are mega-project and some are major projects.

-Mega-project in mining field is not always as glorious as people think it is. Interviewee 14


4.2.14 Mega-engineering projects; leadership


Table 4.17: Responses to Mega-engineering project; leadership

14: How did you evaluate the impact of leadership on the project progress?

Authority and organization chart affected on the project progression. Interviewee 1

-Higher management approval during design phase caused project delay.

-We had lack of communication from top to bottom.

Interviewee 2

Project owner was the main caused for project delay. Interviewee 3

-Top management approval took long time especially for design evaluation.

-There were a lack of understanding between higher management and project

teams.

Interviewee 4

The higher management did not assigned the authority matrix for project team

properly. Interviewee 5


107


-External and internal authority cooperation impacted on the project success.

-Lack of clarity in regular communications spike the number of meeting requests

and waste stakeholders time.

-Lack of authority cooperation caused project cost overrun.

Interviewee 8

-Project permits consumed long time to get ready by the external authorities.

-Any project interface is a major risk, and in this mega-project we had five

interfaces with governmental authorities. It took us three years to reach to

agreement with only one authority.

Interviewee 9



-Leadership must refrain from squeezing contract conditions.

-Leadership protect the resources and spend money-wisely.

-Leadership must plan project schedule-wisely.

-Leadership must considered the construction time allowance within -+10 of the

project time.

-Planning must be simple.

-Leadership must follow up the project plan on daily basis.

-Leadership must have honesty and integrity.

Interviewee 12

Leadership must avoid change management by define project and jobs properly. Interviewee 13

-Stakeholder communication is very important and there is a plan for

communication but need to activate. Interviewee 14


4.3 Summary of Interviewee Questions and Responses

The following tables represent summaries of the questions that given to the interviewees

of the gold subsidiary, the aluminum subsidiary and the headquarters, and their responses

108

Table 4.18: Interviewee question and response from QI to Q4:

Interviewee

1

Interviewee

2

Interviewe

e

3

Interviewee

4

Interviewee

5

Interviewee

6

Interviewee

7

Interviewee

8

Interviewee

9

Interviewee

10

Interviewee

11

Interviewee

12

Interviewee

13

Interviewee

14

Interviewee

15

QI What was your position? President

of Gold

subsidiary & vice

president

of company

Director,

new gold

mines Devel ,

Gold

subsidiary

Gold

project

director & execution,

Gold

subsidiary

Manager,

projects &

ENGR & QA/QC,

Gold

subsidiary

Mining

project

manager, Gold

subsidiary

Manager,

project

control & risk mgmt,

Gold

subsidiary

President of

Aluminum

subsidiary

Program

deputy

project director,

Aluminum

subsidiary

Program

deputy

project director,

Aluminum

subsidiary

Financial

planning &

analysis manager,

Aluminum

subsidiary

President of

petro-

chemical company,

partner of

Aluminum subsidiary

GM

planning & Devel , partner of

Aluminum

subsidiary

VP of

project

mgmt & ENGR

Headquarte

rs

VP of

corporate

control & enterprise

Risk,

Head-quarters

Director

Contract&

procurement, Head-

quarters

QII How many years of work experience do you have? 25 years 15 years 18 years 17 years 16 years 14 years 30 years 20 years 20 years 14 years 27 years 34 years 34 years 29 years 26 years QIII Which sector do you have the most experience in? Mining Mining Petro-

chemical Petro-chemical

Petro-chemical

Petro-chemical

Petro-chemical

Mining Petro-chemical

Mining Petro-chemical

Petro-chemical

Oil and Gas Oil and Gas Mining

QIV What is your company affiliation? Gold Gold Gold Gold Gold Gold Aluminum Aluminum Aluminum Aluminum Aluminum Aluminum Headquarte

rs

Headquarte

rs

Headquarters

QV Are you client or partner? Client Client Client Client Client Client Client Client Client Client Partner Partner Client Client Client QVI Is your company public or privet? Public Public Public Public Public Public Public Public Public Public Privet Privet Public Public Public Q1 What is the capital investment of your mega-engineering projects? One mine

only was

cost 500 million

dollar

Variant

capital cost

for 8 mines each one

has its own

facilities

No

answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

$10.8

billion

dollar for an

aluminum

complex

Buildings,

piping

system, roads,

security

system, fence, roll

milling,

smelter, refinery &

mine

$10.8

billion

dollar for mine,

refinery,

smelter, roll-

milling,

sheets & battery

limits.

750 million

dollar

750 million

dollar

No answer

was given

We had 10

projects

some were mega-

project

another were major

projects

No answer

was given

Q2 What is your company type? Operationa

l company,

driven by

market, long-term

product

Operation company

Operation company

Operation company

Operation company

Operation company

Operation company,

driven by

opportunity, has long-

term

product.

It is an operational

company.

Mining operation

company

Mining operation

company

Petrochemical

company

owned by 50% privet

& 50%

mining company

Petrochemical

company

owned by 50% privet

& 50%

mining company

Operation company

Mining company

owned by

50% public & 50%

government

Operation company

Q3 Did the Mega project have a clear theoretical base? We had a

lack of

theoretical image of

megaproje

ct

I didn’t

think so

It was

hard to

visualize project

process at

early

stage

Undecided Undecided Undecided No it was

not clear.

-We had used

traditional

PM process

to

implement

it

Not always,

it is

different from sector

to another

but with

same

activities

and process.

Undecided Undecided No No No No Undecided

Q4 Did the Mega project have a clear professional image? Not before

the prefeasibili

ty phase.

You can

visualize it but hard to

implement

it without the help of

the

technology providers.

Undecide

d

Undecided Undecided Undecided No since

there were a lack of

expertise

and technology

at the

project early

stages.

-Without

experts & leading

firms the

image of mega-

project

stays ambiguous

-Resources,

scope & monitoring

can

measure the project.

Undecided Undecided No No No Not always

as glorious as people

think it is.

No

109

Table 4.19: Interviewee question and response from Q5 to Q11

Interviewee 1

Interviewee 2

Interviewee 3

Interviewee 4

Interviewee 5

Interviewee 6

Interviewee 7

Interviewee 8

Interviewee 9

Interviewee 10

Interviewee 11

Interviewee 12

Interviewee 13

Interviewee 14

Interviewee 15

Q5 How do you define the Mega project?

By cost and

size

By

difficulties,

technology used, and

budget.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

By size and

cost

By size of

the project,

parties involved,

capital

project and technology

involved

No answer

was given

No answer

was given

Cost Cost Cost and

size

Cost and

size define

the mega-project.

No answer

was given

Q6 Was the Mega-project driven by practice only? No, it was

driven by market.

-we had 8 mining

projects

I think by

technology, experience

and expert in the

mining

field.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Technical

experience

By technical

expertise.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Somewhat

agree with this

statement

No answer

was given

Q7 Which process did your company follow in the early stages of the project? -Traditional

project

management.

-Stage-gate

process for

the design

phases

evaluation at

basic & detailed

engineering

-Stage-gate process for

design

phase.

Traditional

PM for the

rest of the

phases due

to the limitation

of project

management team.

Stage-gate for design

process

-No

technical

team to

follow up

the design

phases properly.

-Stage-gate process for

design

evaluation with the

designer

-It had

Covered

economic parameters

such as

IRR, ROI & MPV,

value

engineering, HAZOPS

and

operability study.

Stage-gate for the

design

process

Project managemen

t process.

Project managemen

t process

and stage-gate

process.

-PM process in the

concept

phase

-The stage

gate process

for design &

planning

instead of traditional

PM

No answer was given

Traditional project

managemen

t

Project managemen

t

Project managemen

t process

Project managemen

t to manage

technical and

nontechnica

l activities

and stage-

gate

process for design

Project managemen

t and now

moving toward

stage-gate.

No answer was given

Q8 Types of mega-project contract at the early stages of the project? Either EPC

or EPCM

-EPC

contract -

EPC/LSTK

-EPCM contract

-

EPCM/LSTK

EPC or

EPCM contracts

EPC or

EPCM

EPC or

EPCM

EPC or

EPCM

EPCM or

EPC

2- EPCM

2- EPC & 1- EPC/LSTK

for services

and small projects.

-Cost of

change orders in the

EPC/LSTK

higher than

EPCM due

to the

fixation of the price.

-EPC OR

EPCM -

EPC/LSTK

contractor had

declared

bankrupt in the middle

of the

constructio

n phase

-EPCM or

EPC -The type

of project

contract affects

project cost

estimation

EPC and

EPCM contracts

EPCM and

EPC type of contract

EPC or

EPCM

Depends on

many factors, in

general

EPC and EPCM

-EPCM

-EPC -Unit rate

when

project scope is

unknown

Q9 Type of project delivery? Project

management process

except the

design phase

Just-in-time

delivery and parallel

workflow

models

Project

management process

Project

management way

Project

management

Project

management

Traditional

project managemen

t process

and stage-gate

process

Project

management sequential

activities

Project

management process

No answer

was given

Project

management process

was

effective for our

projects.

Project

management and it was

useful tool

for our operation

medium-

sized company.

Project

management process

Sequential

traditional work

No answer

was given

Q10 Had you ever faced difficulties to execute Megaprojects in the initiation phase? Yes, design

on three stages,

contractor

selection.

Yes at

completion of

conceptual

phase, preparation

for design.

-Technical team

-Evaluation

time

Yes, the

PM had a lack of

design

experience -

unprofessio

nal designer.

-lack of

enough time for

design

evaluation

Yes, a lack

of professiona

l technical

team during the design

phases

-design evaluation

time was

short -

maintenanc

e and operation

teams did

not involve in the

design

evaluation

Yes, many

-No technical

team in the

design phases.

-Contractor

-evolution time of

design

items was not enough

-operation

team did not

participated

in the design

phases

Operation

& maintenanc

e teams had

not been involved in

design

evaluation workshops.

Yes, he

stage-gate process and

the need to

link the stage-gate

process to

the right discipline

or

department and team.

Yes,

preparation for

everything

from scope definition to

design to

bidding.

No answer

was given.

Yes, many

with the contractors,

material

prices and market

booming.

Yes Yes Yes at any

starting point there

is always a

difficulties and we had

a lack of

expertise.

Yes, project

main contractor,

biding,

contract awards,

government

regulations.

The

performance guarantee,

governor

law, attribution

rule,

insurance, acceptance

of

conditions, testing of

technology,

change in market and

variation

procedure

Q11 Had you ever faced difficulties during detailed design engineering? Yes stage-

gate

approval

Yes, During

basic design

which leads

to many problems of

detailed

engineering.

-Stage-gate design

approvals

Our problems

had occurred in

the design

phase

Yes design evaluation

and design approval

had took

long time to evaluate by

the high

management

Yes , lack of allowed

time for evaluation

preparation

by the owner to

the internal

project members

Yes Yes and happening

always for the most of

projects.

Yes, we had 40 detailed

design packages and

50 million

man hours.

-Problem of

basic and detailed

design,

change order or scope

change.

Yes many difficulties

and problems

Yes, design packages

had been distributed

among the

three leading

companies

and under the

supervision

of a leading contractor

Always Yes and we had to

reviewed everything

the

designer.

Yes and most of the

projects if not all of

them had

faced difficulties

at the

detailed design.

For sure yes but you

can ask the technical

team.

No response

was given

110


Interviewee 1

Interviewee 2

Interviewee 3

Interviewee 4

Interviewee 5

Interviewee 6

Interviewee 7

Interviewee 8

Interviewee 9

Interviewee 10

Interviewee 11

Interviewee 12

Interviewee 13

Interviewee 14

Interviewee 15

Q12 How many times did you change the scope of work? Once or

twice a

month for 22 months

project

Many

times

Many

times

during the design

phases

A lot Many times Many times We had

seen it

every month

More than 5

times during

construction phase &

many during

basic engineering.

Many times It had

happened

many time.

Unstoppable

issue

It is an

ongoing

problem for every

project

Many

times.

No answer

was given

No answer

was given

Q13 How do you evaluate the scope and the scope creep? It is hard

to stop it

and we had tried

to minimize

it.

Scope

creep had

raised due to the

basic design

faults. We

did spend a lot of

time and

money during this

stage.

The owner

was the

main source of

the project scope

creep.

The design

and

construction phases

full of scope creep

We had

faced it a

lot during the project

lifecycle

Most of the

project

risks considered

as a scope creep

sources, we

had tried to control it,

No answer

was given

Change

order had

appeared after award

of contract & was a tool to

show scope

creep.

Design and

contractor

were the reason

behind scope creep

and due to

lack of internal

technical

team. -Lack of

government

cooperation

-Design

deficiency

-Change project

phase from constructio

n to

operation had caused

the scope

creep & cost

overrun

-Unstable supply of

utilities

-Inaccurate raw

material

calculation -Inaccurate

cost

estimation information

from the

main contractor

during the

construction

-Owner

The owner,

project

designer, contract

agreement, accuracy of

feedstock

calculation & main

contractor

were the main reason

for scope

creep due to a lack of

internal

technical team.

-Transfer the

project from construction

phase to

startup phase had caused

scope creep

and extra cost due to

the contract

agreement -Utilities

-Bank loan

delay

-Contract

agreement

with the owner,

contract agreement

with the

technology provider &

amended

project scope by

the owner

caused scope

creep.

-We had faced

deficiency

with the design at

the project

early stages due to lack

of internal

design team.

-Board

members’ approval

-Happened

due to

delay of project

loan. -Imposition

of board

members decisions

on the

company strategy

and on an

award contractor.

No

response

was given

No

response

was given

Q14 What is the percentage of allocation for front end engineering, design and planning from overall capital cost? No

response

was given

30% No

response

was given

No

response

was given

No

response

was given

No

response

was given

No

response

was given

10% No

response

was given

No

response

was given

No response

was given

No

response

was given

No

response

was given

No

response

was given

No

response

was given Q15 What measures did mega- project at early stages need to take to improve project performance and avoid project life cycle problem? Well

project

definition

Measured mineral

resource

(ore) and

well

define

project and scope.

No response

was given

No response

was given

No response

was given

No response

was given

Good design and

local

mining

contractors

and

suppliers

Well defined scope and

realistic

schedule

backed up

with true

available resources,

and

monitored weekly to

adjust and

remedy any deviation

from

baseline.

Contractor who knows

the local

market

Local suppliers

and

contractors

If there was a Local

designer

Contractor, vendors

and

suppliers

for the

design and

construction

No response

was given

Good planning

No response

was given

Q16 How did you rate internal lack of awareness or knowledge about this mining project? High Very high

among the

project new

comers

who had joined the

project

team from non-

mining

industry

High High High High High since

it was a

new project

Mining

projects were

new industry in this

country and

it was clear we have a

shortage of

expertise

Very high High Extremely

high

Very high Mining

projects

were new locally

High

because it

was a new field in the

country

No

response

was given

Q17 How did you evaluate the support from parties with authorities? It was not

effective

enough

There was

a lack of

support from

different

parties.

Support

was not

effective from all

parties

Communic

ation plan

was not proper

The project

had a lack

of the proper

support and

communication

No answer

was given

It was good Lack of

authorities’

support was one of the

major

dilemmas of the project.

We had

faced lack

of support in different

occasions

It had

happened

in different levels of

the project

lifecycle

We had

faced

difficulties.

There were

a lack of

support in some cases.

No

response

was given

Authorities

were

encouraging all parties

but not

effectively

No

response

was given

Q18 How did you evaluate the importance of the technical understanding? Very

important

With lack

of process

were the biggest

factors caused a

gap in our

mining projects

Very

important

Very

important

Very

important

Very

important

It was very

important

The

percentage

of importance

were very high since

we had a

small technical

team.

Extremely

important

especially in the

mining field

We had a

lack of

expertise at the

beginning of the

project

Extremely

important,

we had lack of technical

expertise in mining

industry

Very

important

for any project to

have technical

expertise in

the same field.

No

response

was given

Insufficient

technical

knowledge is

prominent feature

everywhere

.

No

response

was given

111


Interviewee 1

Interviewee 2

Interviewee 3

Interviewee 4

Interviewee 5

Interviewee 6

Interviewee 7

Interviewee 8

Interviewee 9

Interviewee 10

Interviewee 11

Interviewee 12

Interviewee 13

Interviewee 14

Interviewee 15

Q19 How did you evaluate the importance of the senior management commitment? It was so

important

but had needed to

assign

responsibilities

properly

They were

committed

but there were a

major

caused of projects

delay

Owner had

caused a

project delay

No answer

was given

No answer

was given

No answer

was given

-A lack of

the project

cooperation had

happened at

the project early

stages.

-the tax was project time

& extra

cost

Lack of

effective

commitment had

seriously

affected the project

delivery

from the project

early

stages.

It’s

important &

there were a lack of

commitment

from senior management

- Lack of

cooperation b/w external

authorities &

internal higher

management

.No answer

was given

They were

committed

but we had a lack of

communica

tion.

-The leadership

must have

honesty & integrity.

-A lack of

spending money-wisely

Very

important

It was the

most

crucial and required

during the

project lifecycle.

Extremely

important

Q20 How did you evaluate the importance of time to execute the project? Time is

important

for any

project

Poor planning

had led to

lag of project

activities

Very important

Extremely important

Time means

schedule

and money

Good project

definition

and plan are

important

to avoid project risk

Extremely important

for all

shareholders and

stakeholder

s

Lack of project

understandi

ng during early stages

lead to

inadequate execution

time.

Very important

but we were

behind the schedule

Very important for

project cost

estimation, market,

construction

material, labor,

contractors.

And so on

Extremely important

Very important Extremely important

It is one of many

causes of

project failure in

the world

of project managemen

t.

Very important

Q21 How did you evaluate the importance of the training in organization? We had

mining

short courses

training for

technicians.

We had a

good

training program

and it is so

important for new

comers.

Very

important

especially at the

constructio

n phase

Very

important

Important Very

important

especially for those

who had

non-mining background

Mining was

a new

sector and we had

needed to

train the new

comers,

operators, technicians

We had a

good

training budget and

without it

the employees

would cost

the company

more than

the money.

Important for

mining field

Very

important

Important Important Very

important

and we do that

regularly

for our employees

Employee

training is

our way to influence

their

performance and we

spend a lot

of money on training.

Very

important

Q22 What factors had affected the success of the projects? Role and

responsibili

ty

-project definition

-Location

-Contractor -Inaccurate

mineral calculation

-Location. -Logistics.

-Quantity

of ore. -Planning.

-team

members -stage-gate

process

-The owner -Project

definition

-Scope definition

-Contract

-Design -cost

estimation

-Job description.

-Project

definition -Contractor

-team

-Design -Technical

team

-Contractor -Logistics

-Project risks were:

-Contractor

-Logistics -project

team

members -Location

Everything from design

to

Expertise, to

contractors,

to startup.

Technology license,

logistics,

PM team, project

definition,

utilities, authority

cooperation

The project had

difficulties to

obtain project

licenses from

the governments

No answer was given

No answer was given

EPC clauses had not

considered

some conditions and

had affected the

project started-up phase

specifically at the mechanical

completion

stage

Everything is important

for mega-

project or any project.

New technology

and

industry competence

had a direct

impacts on project

success

Time, team, market

booming,

location, weather

and quality

Q23 How did you evaluate the communication among project stakeholders? It was not

effective as

required

We had a lack of it

from top to

bottom

It plan was not good.

It between parties was

not well.

There were a lack of it

between

contractor and internal

project

team.

No answer was given

It was good -Lack of clarity in

regular it.

A lot of meeting

that waste

the project time.

There were a lack of it

It needed for reform

It plan was not

effective

-The higher management

had tried to

squeeze the contract

conditions.

-A lack of simple planning

-A lack of daily

supervision

There were a lack of

job

description, project

definition

and process.

Stakeholder it is very

important

and there was a plan

for it but

need to activate.

No answer was given

Q24 How did you stop project creep from the beginning of the initiation phase and planning phase? Accurate

deposit

calculation and good

design.

-Calculate

ore quantity

-Defining the project.

-Defining

the scope of work

properly

The owner

and

contract strategy

were the

reasons behind the

scope

creep.

Proper

definition

of scope of work

A clear

definition

of scope of work

Scope

creep at the

prefeasibility had

happened

due to lack of follow

up the

design with the

designer.

No answer

was given

Well define

scope &

objectives to be set up

from the

beginning.

-Design &

contractor

were the reason

behind scope

creep & due to lack of

internal

technical team.

-Lack of

government cooperation

-Design

deficiency

-Change project phase

from

construction to operation

had caused

the scope creep & cost

overrun

-Unstable supply of

utilities

-Inaccurate raw material

calculation

-Inaccurate cost

estimation

information from the

main

contractor during the

construction

-Owner

The owner,

project

designer, contract

agreement,

accuracy of feedstock

calculation

& main contractor

were the

main reason for

scope creep

due to a lack of

internal

technical team.

-Transfer

the project from

constructio

n phase to startup

phase had

caused scope creep

and extra

cost due to the contract

agreement

-Utilities -Bank loan

delay

-Contract

agreement with

the owner, contract

agreement with

the technology provider &

amended

project scope by the owner

caused scope

creep. -We had faced

deficiency with

the design at the project early

stages due to

lack of internal design team.

-Board

members’ approval

-Happened

due to

delay of project

loan.

-Imposition of board

members

decisions on the

company

strategy and on an

award

contractor.

No

response

was given

No

response

was given

Q25 Did this project completely achieve the required objectives in the initiation and planning phase? Yes Generally,

yes

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Yes Yes, most

of them did

Yes No answer

was given

No answer

was given

No answer was

given

Yes Yes, most

of them

No answer

was given

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Q26 How far were you satisfied with implementing projects? Satisfied Satisfied Not

satisfied

Not

satisfied

Not

satisfied

Satisfied Satisfied Fairly

satisfied

Not

satisfied

Not

satisfied

Not

satisfied

Not

satisfied

Satisfied Satisfied Fairly

satisfied Q27 What did you think the main on-going costs are for any given project? Change

order

Change

order and scope of

work

Change

order

Change

order

Change

order

No answer

was given

Change

order

Change

management and scope

creep

No answer

was given

Change

order

Change

order

Change

order

Change

order

Scope of

work

No answer

was given

Q28 How closely did the project adhere to schedule duration of design, planning study in early stages? There were

a lag time

in project schedule

-Basic

design and

then detailed

design had

consumed the time

-It had

needed long design

process

evaluation, & authority

approval.

It was

behind the

plan

Not

effective.

-Delay of

project

design packages

submission

by the designer

had

increased the project

cost.

-Lack of allowed

time for

preparation of design

evaluation

by the owner

-Lack of

time for design

bidding

plan, design bidding &

pre-review

time of design

No answer

was given

We were

behind the

schedule since we

had faced

difficulties at the

beginning

of the project

Design

phase had

took long time due to

many

different factors &

exceeded

the design deficiencies

by the

designer

It had

exceeded

the planned time and

some of

stakeholders did not

participated

in the design

review.

Very

behind

Lack of a

proper

planning.

A lack of

proper

project definition, a

lack of

considering the

constructio

n time allowance

within -+10

of the project

time.

Some

projects

were behind the

schedule

No answer

was given

No answer

was given

Q29 Do you think the funding mechanism for the newly constructed mega project was effective? Inaccurate

ore calculation

had

affected on the funding

mechanism

Ore

quantity calculation

had

affected on project loan

No answer

was given

No answer

was given

No answer

was given

No answer

was given

The

shareholders had fully

supported

the mega-project

It depended

on whether the project

was being

self-funded by the

owners or

by other means

No answer

was given

Very

effective after

dividing the

project to three

project to

obtain three different

loans from

different banks.

Banks want

documents stating the

quantities

of mineral resources &

project life

expectancy in order to

facilitate

any loan

The process

was so long.

No, mining

funding mechanism

different

than oil and gas funding

mechanism

Usually no

and there were many

factors that

affected the funding

mechanism.

Different

from project to

another and

it highly depends on

the natural

resources

Q30 Did your organization use tools at the early stages before of project planning? If so, what were they? Yes,

software programs

to calculate

the ore quantity.

Yes,

mining software

programs,

construction tools.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Yes for

design, raw material

calculation

and so on

Yes,

variants programs

since we

have integrated

project in

one complex.

“Matman”

was a tool for tracking

procuremen

t at constructio

n phase

No answer

was given

Yes

different tools for

each

department

-Feedstock

accuracy calculation

with the

help of the main

contractor

for the project cost

estimation.

-Software programs

were

expensive.

The most

important part of the

project at

the early stage was

the ore

calculation. Contractors

did that

part.

3D building

information modeling at

the

prefeasibility stage

Yes, 3D

simulation software

for

construction and

buildings

and another tools for

mining ore

No answer

was given

Q31 What were the main barriers that hinder software tools in mega-projects? Price and

manpower -Capability of use the

program.

-Cost of long license

agreement

-Intractable with other

systems.

No answer was given

No answer was given

No answer was given

No answer was given

-Project time and

cost of the

program. -If there

were a cost

estimation program we

could

obtained it

Every contractor

had its own

software programs.

However

output needs to be

in form of

report readable by

all.

No answer was given

Software programs

project very

costly.

Price was expensive.

The high cost of

software

programs

No answer was given

Budget and operators

No answer was given

Q32 How could these impediments be overcome? It was hard

to find a good

program

User-

friendly mining

software

programs.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Agree with

the stakeholder

s and all

involve parties

about the procedures

and tools to

be used during the

initiation

phase of the project.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

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Q33 Did you use building information modelling in the concept/initiation/planning phase? Yes and

had

provided by the

designer

Yes, it was

one of a

main contractor

responsibili

ties

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Yes Yes, by the

technology

licenser or nominated

design

company

No answer

was given

No answer

was given

Yes Designer

had

provided it

Yes Yes,

contractor

had provided

3D building

modelling.

No answer

was given

Q34 What were the reasons behind the limited use of software tools during early stages? Prices and

operators -Expensive prices

-We had

our own software

programs and we

were

dealing contractors

in the

mining field to

calculate

the mining ore.

No response

was given

No response

was given

No response

was given

No response

was given

No response

was given

Every contractor

has its own

software programs.

No response

was given

The price or lack of

effective

cost estimation

programs

Time, price and

manpower

Cost and the

limitation

of project time

No response

was given

Business unit had

used

essential software

programs for

communic.

meeting & decision

making

such as Microsoft

office,

AutoCAD & 3D

modelling

No response

was given

Q35 How did you evaluate the cost of megaproject software? Expensive Low

compared to the size

and budget

of this massive

project

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Low

compared to the size

and budget

of this massive

project

No answer

was given

Expensive High High High and

needs for budget &

training

Expensive No answer

was given

Q36 What were the weaknesses and strengths of the software tools approach in the initiation phase? -Very

powerful

to calculate

ore deposit -Expensive

-Simply without an

accurate

ore calculation

any mining

project will face a

difficulties

-We had limited

budget &

time to estimate the

ore

quantity.

No answer was given

No answer was given

No answer was given

No answer was given

Price and operators

It’s as good as the data

been fed to

them.

No answer was given

Price Time, price and

manpower

Cost and the

limitation

of project time.

No answer was given

It is a technical

question &

you can ask the IT &

technical

No answer was given

Q37 How did the external team influence software tools use in this project? Ore

calculation

and design

Contractors

calculate

the ore quantity &

without it

we can’t get a loan

or execute

the project. Contractors

calculate

the ore quantity &

without it

we can’t get a loan

or execute

the project.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

External

teams had

handled most of the

work.

We had

needed the

data for the ore at the

beginning

of the project.

Design,

constructio

n and managemen

t

We were

dealing

with 5 leading

companies

We

outsource

most of the project

activities

Contractor

was

responsible about most

of the jobs

No answer

was given

No answer

was given

Contractor

responsible

about the procuremen

t tracking in

construction phase

Q38 Did you use value management in your organization? If so, how did you use it? Yes and

according

to internation

al

standards.

Yes, indoor

and outdoor

teams

Yes for

design

evaluation

Yes, during

the design

phases and to evaluate

project

items with best cost

Yes, to

evaluate the

project design and

equipment

function

No answer

was given

Yes Yes, 51%

to 75% of

the early stages time.

Yes No answer

was given

It

consumed

the time and it needs

for

technical expertise.

The main

contractor

had handled

everything

under our supervision

No answer

was given

Subsidiarie

s do it at

project early

stages.

There were

agreements

with value engineering

consultants

Q39 Did your organization use value management during the concept stage of project life cycle? Yes and in

the design

for evaluating

HAZOP on

three stages

We had

used it

during design.

During

prefeasibilit

y & feasibility

phases

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Yes, it had

used from

the early stages of

the project

lifecycle to reduce the

cost &

increased the value of

the items function

No answer

was given

No answer

was given

It must

focus on

adding value not

deducting

the cost

Not

effective.

No answer

was given

It used by

the

aluminum, gold and

phosphate

projects.

Yes

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Q40 Did you use value management for design stage? Yes and we

had our

own value engineerin

g standards

It was an

important

tool for basic

engineering

and detailed

engineering

.

Yes on

three stages

and for basic and

detailed

design

Yes but

internal

value managemen

t team had

a lack of experience

in value

engineering

Yes but we

had faced

difficulties due to the

lack of

evaluation time and

operations

team did not

participate

in the design

evaluation

Yes but not

effectively

due to lack of

participatio

n of the rest of teams in

design

evaluation

Yes Yes for all

projects

starting of the design

phase.

No answer

was given

No answer

was given

yes Yes, value

engineering

review with the

consultant

and designer.

Yes Yes Yes, and

value

engineering consultant

companies

had participated

in the

design review.

Q41 Did you spend money on value management, software tools during the project early stages? Was it cost effective? Yes we had

spent

money on

external value

manageme

nt consultant

and on

mining software

tools.

Yes, on external

value

management team and

on mining

software program

with the

support of our

contractors

Yes on external

value

management consultant

team

Yes Yes Yes Yes Yes, for the mega

project, the

cost was relatively

very small

compared to the

overall

project cost.

No answer was given

Yes No answer was given

No answer was given

Yes We had a well-

equipped

company with all the

needs that

assist the department

s to making

decisions

Yes

Q42 Did your company utilize any economic evaluation techniques as part of the decision process? Yes No No answer

was given

No answer

was given

No answer

was given

Risk

evaluation workshop

and risk

registry

Cost

estimation report

Unfortunate

ly, No

Risk

registry

Cost

estimation report

No answer

was given

Cost

estimation report

Yes Yes Yes

Q43 How did you rate the flexibility in contractual provisions? It was not

flexible

due to the different

risks that

surrounding the

projects

-serious trouble

with the

project clauses and

contract

type.

Flexibility

provisions

specify a framework

for how to

renegotiate contracts

but it was

hard to achieve and

it takes a

long time.

No answer

was given

No answer

was given

No answer

was given

In order to

avoid

unnecessary rework

Contract

strategy must be

considered

carefully.

Moderated No

flexibility

and the contract

words lack

of its natural and

ordinary

meaning.

No answer

was given

No answer

was given

It was not

that good

It needs to

be

considered in the

future

projects.

No

response

was given

Contract

flexibility

was largely unrealized.

It was not

easy to

achieve.

Q44 How did your organization make decisions on building a new project? We had

received

the instructions

from the

higher manageme

nt and then

we follow up the

normal PM

procedures

We had

used

traditional PM &

moving

toward stage-gate

process to

achieve the required

objective

No answer

was given

No answer

was given

No answer

was given

No answer

was given

We receive

the

information from the

board

member then we

start the

execution

We had

used stage-

gate oriented

process

with the leading

companies

No

response

was given

No

response

was given

After board

member

approval we follow

up the

project managemen

t process

The board

member are

the authorized

entity to

decide the new

projects.

No

response

was given

Board

members

and higher authorities

make the

decisions and in our

turn we

pass them on to

related

subsidiaries after we

have

studied them.

No

response

was given

Q45 What was the normal procedure for contract awards in your firm with regards to existing construction project? Experience

and low prices

Low price No answer

was given

No answer

was given

No answer

was given

No answer

was given

Low prices

and experience

Lowest

price and technical

experience

No answer

was given

Lowest

price

Lowest

bidder

Low cost Low price Technically

successful bidder and

lowest

price.

Good

experience with

Lowest

price Q46 What were the main factors (criteria) that play a major role in awarding a contract for a new construction project? Work

experience,

knowledge

and low price

Technical

& previous

experience

in the same field

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Experience

and

knowledge

Ability of

contractors

in terms of

resources and

previous

experience.

No answer

was given

Experience Experience

in local

market,

price and reputation

Technology

, experience

and

contract price.

Reputation

and work

experience

Contractor

work

experience

and other factors

Many

factors such

as market

knowledge, work

experience,

price. Q47 What were the main factors (criteria) that play a major role in awarding of a contract for maintenance of an existing construction project? Years’ of

experience and resume

Technical

experience

Work

experience

Experience Work

experience

Market

knowledge and

technical

experience

Experience

and knowledge

Proven

prior experience

in the same

field

No answer

was given

Experience Experience

in local market,

price and

reputation

Technology

, experience and

contract

price.

Experience

and knowledge

Previous

experience

Experience

in the same field.

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Q48 Was the current contract award mechanism in your company effective? For some

projects yes

and sometimes

no.

Variant

from

project to another

No it was

not that

effective

I don’t

think so

No No answer

was given

Yes Not really,

because the

cycle takes much longer

than it should

take, causing major

schedule

delays.

No answer

was given

No No No No answer

was given

Yes it was I can say yes,

it is based on

our resources

Q49 How can the contractor inputs be included in the design? The

contractor

did everything

including

the design and

constructio

n

Contractors handles

everything since most

of the

project contracts

were either

EPCM or EPC

The contractors

did everything

from design

to project startup.

Design and

construction

Technology, design and

construction

Everything The contractor

and consulting

companies

had handled

everything

Construction team input &

experience did not taken into

consideration

during the design phase.

The designer

did the project

design

The project design had

done by a leading

design firm

and reviewed

by

consulting firm and

some of the

internal team

Usually the technology

provider nominates

the

designer and the

contractor

as well.

The selected

design company

did the

design under our

supervision

.

No answer was given

Their feedback &

experience were

needed to

be considered

immediatel

y after signing the

contract

The projects either EPC

or EPCM

Q50 How did you evaluate the traditional procurement system (Design-Bid-Build)? It needs a

re-

evaluation

Not

effective

Needs to

reconsidered

No answer

was given

No answer

was given

No answer

was given

Good Interests and

relationships

affect the decision-

making in this

kind of procurement

system.

No answer

was given

Not

effective

Not

effective

It needs for

a

reassessment

No answer

was given

Applicable

everywhere

.

Not bad

Q51 How can any conflict of interests among project stakeholders be solved? Through

discussion

and

meetings

Meetings Meetings and open

discussion

Meeting but It was

wasting of

time

No answer was given

No answer was given

Negotiation and talk

Through mutual

resolution and

alignment of project targets

and goals in

the early stages.

Meeting, discussion

&

commitment

No answer was given

Effective communica

tion and

meetings

Meetings and taking

into

account the interests of

all parties.

meetings communication

Discussion and meetings

Q52 How did you assess the risk in your projects? Throughout

the cost estimation

reports

Workshops,

meetings and risk

registry

Schedule According

to the planned

schedule

No answer

was given

Risk

registry

Through

cost estimation

reports

Through

project review,

facilitated

meetings and robust risk

register.

Risk

registry

Cost

estimation

Cost

estimation and risk

registry

Cost

estimation

Risk

registry

Early

warning signs

appear for

us when we have up and

down risk

trends.

Cost

estimation

Q53 What kind of procurement systems tools did you use? How? Lowest

price and

our own

specific criteria

We are an operation

company

and don’t use such

tools.

No answer was given

No answer was given

No answer was given

No answer was given

No answer was given

Lowest price during early

stages &

“Matman” was a Fluor

system for

tracking procurement

during

construction phase

No answer was given

Traditional tool

Traditional procuremen

t evaluation

and list

Design- bid-built

No answer was given

You can ask the

finance

department

It is a contractor

responsibilit

y to follow up

procurement

during the construction

phase

Q54 What were the benefits and drawbacks of implementing technology within the current procurement system? How can it be improved? Not sure

about it but seems

effective

No tools No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

“Benefits”

were that all of the

information is

available at the press of a

button.

“Drawbacks” were data

require to be

maintained

regularly,

otherwise the

tool will not be effective.

No answer

was given

. Not

effective

It needs

for improveme

nt

It need for

reassessment

No

response was given

No

response was given

No response

was given

Q55 What type of contracts was used for the megaproject? Usually

either EPC or EPCM

-EPC or

EPCM. -Most of

our project

had used EPC

-EPC or

EPCM. -EPCM

needs a large

project team, not effective

for our

projects, caused many

change

orders

-EPC or

EPCM. -EPCM

was not

effective locally

-EPCM or

EPC -EPC, the

full risk

lays on the contractor

-EPCM

responsible about the

design not

the time & schedule

No answer

was given

EPCM and

EPC

Hybrid

EPC/EPCM reimbursemen

t & different

kind of contracts for

the small jobs

EPCM and

EPC

Two

EPCM, to EPC and

one EPC

lump sum turnkey.

EPC and

EPCM

EPC and

EPCM

No

response was given

No

response was given

There are

many contracts and

each project

has specific type of

contract. in

the latest projects the

type were

either EPCM or EPC

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Q56 What was the normal procedure for the contract award with regards to a new construction project? Low bidder

and price

Design-

Bid-Award

Lowest

price

No answer

was given

No answer

was given

No answer

was given

Experience

and low

price.

-Lowest

price

however it was not

effective

due to the conflict of

interests

and relationship

s that had

affected the final

decision-

making

Now

answer was

given

-Design –

bid- built

-Lowes price

Lowest

price.

The project

owner had

imposed contract

conditions

during the contractor’s

invitation

to bid such as

squeezing

contract time,

budget,

schedule, & unrealistic

constructio

n and delivery

time of

suppliers.

Low price Low bidder

price

Lowest

price

Q57 How important did you rate time requirement? It

absolutely

was so important

It was very

important

for schedule

and

execution of the

project.

Extremely

important

Very

important

Extremely

important

Too

important

Very

important

Extremely

important

for megaprojec

t but delay

is scheduled

for

megaproject.

Extremely

important

Very

important

Adhere to

Schedule is

extremely important

It should be

schedule-

wise and allowance

must

schedule for

constructio

n phase

Very

important

it is important

for all

stakeholders and

shareholders

Very

important

Q58 Could you evaluate type of accuracy and reliability of cost estimation? No answer

was given

-Accurate

& reliable

cost estimation

for mine and mine

equipment

to construct the project.

-Accurate

resources, budget &

expertise to

make decision

Higher

managemen

t financial report

during the business

study in the

conception phase was

not

accurate.

No answer

was given

Delay of

project

design packages

submission by the

designer

had caused increasing

in cost

estimation. - the project

cost

estimation could

increase at

any stage of

project

lifecycle

No answer

was given

Information

of cost

estimation had

obtained from the

contractors

at the constructio

n phase and

from the market

evaluation

at the early stages.

Cost

estimation

accuracy was the

main tool to track the

project

specifically during the

constructio

n phase when many

contractors

involved in the

constructio

n activities.

No answer

was given

-Market and

projects

comparison. -the main

contractor was

responsible

about the cost

estimation

report. - Location,

site

condition, contract

strategy &

energy prices

had affected

on cost

estimation.

-Very

reliable and

accurate if information

of feedstock

was

accurate at the early

project

stages.

-Cost

estimation

had depended

on the ore deposit

accuracy at

the early stage of the

project.

We had got the project

cost

estimation from

estimating

previous

equipment

and project

the project

cost

estimation had relied

on the ore deposit

calculation

-Profit & cost

estimation

were the most important

thing -Directors had

needed an

accurate info to make

decision,

measure the gross margin,

making

optimal choices &

valuing the

assets based

on it.

No answer

was given

Q59 Could you evaluate the type of cost estimation technique used? No answer

was given It was effective &

was one of

the main contractor

responsibili

ties

Not effective

No answer was given

No answer was given

No answer was given

A monthly cost

estimation

was one of the most

important

parameters to measure

the progress of

megaprojec

t at the constructio

n phase.

Previous project cost

estimation

report for items &

technology

and accurate

cost estimation

for the ore

had consumed

the time.

No answer was given

CEO wants to see cost

estimation

report every six months

before the

construction phase &

fortnightly report during

the

construction activities.

-The project

contractors spending

forecast were

the main source of

information

for the cost

estimation

It was an effective

traditional

way but there were

no

alternative.

The traditional

Cost

estimation evaluation

had

consumed the time but

was effective.

No answer was given

Using accurate cost

estimation had

helped to see project details,

manage

project, assigning

resources & build

schedule.

No answer was given

Q60 Could you evaluate the quality assessment system? High

quality of

projects was our

first

priority

We were

applying

the internationa

l quality

assessment & standards

to ensure

the best results.

No

compromis

e with quality for

mega-

projects.

Extremely

important

High

priority

Very

important

Time,

quality and

cost were so

important

for any project

It had

started

before the lifecycle of

the project

at the assessment

of ore

quality then we had

moved to the quality

assessment

of the contractors,

designers,

manpower, suppliers &

vendors

Mega-

project

means high quality

project.

Extremely

important

No trade-

off for

quality

Extremely

important

Extremely

important

for high cost mega-

projects

-We were

working

according to the

international

quality standards.

-To minimize

project time & keep on the

quality without trade-

off, we need:

-Good vendors &

procedures

-Prequalificatio

n for vendors

-Good suppliers

procedures

Mega-

project

needs high quality

product.

Everything had been

followed

the quality standards

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Q61 Could you evaluate availability and supplies of resources? Gold

product

project is driven by

market.

It is

extremely

important to have the

feedstock

and financial support and

without them

we cannot do anything

Shortage of

labor and

contractors due to

market

booming.

No answer

was given

The

regional

market boom had

caused a

project logistics

problems,

shortage of qualified

manpower

and contractors.

Lack of

contractor

knowledge of local

market had

caused project

delay.

No answer

was given

Mega-project

had

contained plants, roads,

buildings,

train, sea port, electric

energy was

in need to massive

resources in

field of technology,

human, ore,

finance from the

beginning of

concept phase

Mega-

project had

started from

scratch

with no roads,

electricity,

and water and so on.

The project

had located

in a remote area with

no utilities.

No answer

was given

No answer

was given

Without it

we can’t

work in every field

We are a

mining

company and listed in the

stock

exchange market, we

had the

natural resources

and the

support of the

shareholders.

We are working now

on building

up our name and brand.

Extremely

important

for any project and

contractor.

Q62 Could you evaluate the government regulation? Obtaining

project licenses

had took

time

-It hinder the

progress of the project

execution. -

We had faced

difficulties

especially in obtaining

licenses &

with labor laws.

The

government had caused

a project

delay.

Lack of

cooperation to issue the

permit

We had

project permit

problems

No answer

was given

No answer

was given

-Problem

with issuing the licenses

Interface

-Problems with 4 or 5

authorities

around the project

location, -In

the construction

phase

government change the

labor law

-We had

faced a difficulties

to issue

project permits.

-there were

conflicts between the

project and

five external

authorities

-there were a conflict

between the

local people &

project

No answer

was given

Procedures

and regulations

had

consumed the project

time

No answer

was given

Very

important

Extremely

important to implement

projects

Highly

important

Q63 Could you evaluate political situation? Political

stability

extremely

important for

stakeholder

s.

It was very important

since we did

not have neither

technology

nor expertise.

No answer was given

No answer was given

No answer was given

No answer was given

important It was extremely

important for

any new industry &

especially

for our mega-

project.

It was extremely

important

since we had a lack

of

technology and

expertise.

important important important Political stability is

an

important issue for

the

government, company,

contractors

and

expertise.

Economic and political

stability of

any country is a major

catalyst for

international companies,

investors &

expertise.

Very important

for contract

price and kind of

contract

Q64 Could you evaluate the number of competitor on the market? No local

competitors

We did not

have local

competitors

No local

competitors

No local

competitors

No local

competitors

No local

competitors

No local

competitors

, new project and

product.

Aluminum

was a new

industry in this country.

There was

no

competitor

New

integrated

aluminum project.

-Market

boom had led to

increase the

project contracts

price.

New and a

unique

project

New

project

No

competitors

We had an

international

competitors for all of our

products and

we work with them to

support our

product & to find a

foothold in the global

market.

We did not

have local

competitors.

Q65 Could you evaluate culture impact? A part of

our project was with

Asian

companies and it was a

new and

hard experience.

-No effective

management plan in

remote area.

-The communicati

on language

was English and the

international

technical & non-

technical

standards -Asian

companies

did not used with the

international

standards.

No answer

was given

Language

difficulties with Asian

companies

Asian

companies was

imposed on

us due to the market

booming

and other circumstanc

es.

A lack of

communication plan

within the

departments and with

the Asian

contractors.

No answer

was given

-There were

positive & negative

impacts on

the project progression

since there

were contractors

from all over

the world --Most of the

workers

were expertise.

-The impact

was positive except in

cooperation

at construction

phase.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

It had either

positive or negative

impact

Culture

diversity is important

element for

our company since we had

different

products and projects, &

we are in

need to expertise in

different

fields.

It was very

important for the

contract

and we had to facilitate

the

contractors job

especially

during the constructio

n phase

Q66 Could you rate weather condition? No answer

was given It was extremely

important

before doing the design

phase.

No answer was given

No answer was given

No answer was given

In risk managemen

t everything

is important

No answer was given

Weather had moderate

impact on

the progress of the project

during

construction phase & it

was

important for design

phases

Important No answer was given

No answer was given

No answer was given

No answer was given

It was not an issue in the

modern era

and with the development

of

technology.

It is important

for the

contract.

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Q67 Could you evaluate the project location? We had

faced

difficulties with the

water,

electricity and

mobilizatio

n of the contractors

during

construction phase

We had

faced

serious difficultie

s with the

location such as

utilities,

logistics &

mobilizati

on of manpower

to the

location.

No answer

was given

No answer

was given

Important

especially

for logistics.

-Utilities

-Logistics

to remote area and the

location

were important.

No answer

was given

The project

had a lack

of all the necessities

of life at

the concept phase. The

mine

located far away from

the plants

location & sea port.

We had

faced risks in

everything.

-Interface

difficulties

with five gov.

authorities

around the project

location.

-The project had

commun.

Hurdles with the

herders.

Lack of

utilities and

necessities

Extremely

important

Very

important

Extremely

important

for logistics,

constructio

n & product

It was

extremely

important to have a

project next

to the facilities &

resources,

but the ore located in

the remote

areas.

Very

important

for the contract

prices &

labor cost

Q68 Could you evaluate the project duration? Some

project had

delayed

due to different

reasons

such contractors

Contract time was

not

realistic. We had

problem

with contract

biding

time, design, &

constructi

on.

No realistic &

inadequate

We had a planning

problem

Design bidding

plan, &

evaluation had

consumed

the project time.

No answer was given

It must be reasonable

There were a lack of

plan of

managing project

delays.

Project had delayed

It had took long time.

Important Very important

Very important

for the

owner, product &

contractor

as well.

Variant from

project to

another & important

for

shareholders

Extremely important

for

negotiation contract &

price

Q69 Who was your project team leader? Technology

had

provided

by mining company,

construction by intel’s

company.

Foreigner contractor

s for:

Data collection,

designer &

constructi

on

intel’s companies

Different intel’s

contractors

A leading company

for design,

another for constructio

n

For mega-projects, intel’s

companies

Leading company in

the mining

field, constructio

n, design and

managemen

t

Five main internationa

l

contractors for each

project & one of them

was the

project team

leader.

Leading companies

A leading PM team.

-Five

Leading companies

had built mega-

project with

the help of contractors

& sub -

contractors.


provider

Leading companies

International companies

in the

mining, constructio

n and design.

-Expertise

had attracted to

mega-

projects

External to the team

but internal

to the owner.

Leading companies

in the

mining or in project

management field.

Q70 Who, generally, was responsible for carrying out the project during conceptual/initiation and planning phases? Consulting

firms,

different

designers

and

contractors

An internatio

nal

contractor

s

Technology providers

and

contractors

Shareholders ,designers

and

consultants

A leading company

An intel’s companies

Leading firms and

consultants

An external project

managemen

t team

(outside of

the

organization)

External project

teams

Different external

teams

Technology providers

A leading company

Intel’s company

A leading firm

Usually technology

providers in

mining

field or

PM

company

Q71 Who, generally, was responsible for conducting design changes in the initiation phase and prefeasibility phase? Higher

management,

designer,

consultant & our

project

team

Technolo

gy provider,

design

company, project

team &

consultant

Designer,

consultant and our

project

team

Project

team in mining

field

including external

consultants

and the designer

Designer,

value managemen

t consultant

and internal project

team

Intel’s’

Companies.

The

designer and

consultant

teams.

The

internal project

managemen

t team and main

contractor

Designer

& internal

project

management team

Most of the

internal project

managemen

t team did not

participated

in the design

review

workshops at early

stages

Technology

provider & main

contractors

The main

contractor under some

internal

supervision.

Internal &

external design

teams

Project

management company

and design

company

Designer,

consultants and leading

project

management firm.

Q72 What size was your project management team? We had

geologists,

mine and

execution teams and

operators

under training

Small project

managem

ent team

A new team and a few

in numbers.

Small team No.

Small size We had a small team

Small at the beginning

of the

project.

80 to 120 members at

the

construction phase

No answer was given

Small at the early stages

Small Our role is supervision

and

following up the

project

outcome.

Different sizes for

each

project

We have many

project with

different sizes in

each

subsidiary

We had signed PM

agreement

with leading

companies

to manage the projects

Q73 Could you evaluate the number of team members? We had

shortage of

project manageme

nt team

The main

contractor

had handled

the project

activities from

concept to

execution phase

under our supervisio

n.

A few in

numbers.

Small team

number

Small-sized We had a

small team

I spent 65%

of me team

to find expertise

for every

department

It was very

important

to have expertise to

deal with

the companies,

contractors

& different authorities.

We had a

lack of

internal technical

expertise

The project

team

number had impacted

negatively

on the effectivenes

s of project

and process

Very

important

Project

managemen

t teams whither

technical &

non-technical

are

important

Extremely

important

for projects during

different

phases

It was very

important

for any business to

have

expertise in every

department

Expertise &

their

existence could effect

on the

contract price.

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Q74 Did you employ an external team to carry out the project prefeasibility study and planning? If so, why? The whole

projects

had handled by

contractors

but under of our

supervision

and manageme

nt.

Yes, it was

conducted by

an external team due to

the lack of

an expertise in ore

calculation,

design, value management

&

supervision.

Yes, it had

done by

different contractors

in different

fields.

The project

had a lack

of professiona

l technical

team.

Yes from A

to Z

No answer

was given

Yes due to

the lack of

expertise and

knowledge

in the mining

field

Our project

was a new,

complex & unique. We

had neither

the technology

nor the

experience to run such

a mega-

project.

Yes Yes since it

is a large

project with a new

technology

Yes since

we had

limited manpower

Yes due to

the lack of

internal project

managemen

t team

Yes

because we

did not have

technical

teams

As a new

company

we had need to

work

closely with

expertise in

every field both

internally

& externally

especially

during prefeasibilit

y &

planning stages.

Yes since

we had a

lack of technical

teams

Q75 How did you evaluate the importance of the teamwork? -It is very

important. We had

hired

expertise in different

department

s. -The

projects

had managed

by two

VPs’ in constructio

n phase.

We had been

still in the process of

establishing

a professional

team.

Extremely

important

Very

important

Too

important

Highly

important

It was

crucial for every

department

and phase.

We had a

massive mega-

projects &

seriously we had a

lack of

team work.

It was very

important especially

at the

construction phase

Every

project needs the

teamwork

but in our project it

was not

effective enough.

Very

important during the

whole

project stages.

Honesty

and integrity of

team

members and top

managemen

t are important

to

implementing the

mega-

projects.

Extremely

important

It obviously

was very important

for our

medium-sized

company

Very

important

Q76 How was the design team briefed? Projects

design

usually had

done by a leading

firm in the

design

.We did not have a

design team

but the project had

design

problems.

External design

contractor

and consultant

had done

the project design

Not effective

and causes

design problem

Project design was

outsourcing

and some of project

teams did

not participate

in the

design phase.

-We had faced

difficulties

with the design

-Operation

and maintenanc

e teams did

not participated

in the

design

phase.

It was a leading

designing

firm

Lack of design team

that be in

the loop of information

with

construction &

operation

from the early stage

of the

project.

Main contractor

.Designer and

consulting

companies did the

designed

and reviewed

with some

of the internal

team

It was the technology

provider


provider

nominates the

designer

and the contractor

for the

project owner

Weak Maintenance team had

not

considered the

inclusion of

the design team

We had signed

contracts

with design companies

and

consultants to follow

up the

design phases.

Q77 What was the appropriate team to conduct design change? Why? No answer

was given

Technical

teams, all

contractors, construction,

operation &

maintenance.

No answer

was given

All

technical

departments and

engineering

All

stakeholder

s

Project

team,

operators, maintenanc

e &

production teams

All

department

s

All parties

(Engineerin

g, constructio

n

management &

operations)

Key people

from every

department

Stakeholder

s

All

technical

departments

Stakeholder

s

Stakeholder

s

Technical

teams in

every field

All of

engineering

departments

Q78 How did you evaluate the cultural and operating factors among the various regions? Generally

positive We had dealt with

different

countries & cultures. The

contract and

international technical

standards

were the sole communicati

on language.

It was good It was not that bad

It was good in general

It was quite good

No answer was given

Cultural Factors had

their own

impact on the

effectivenes

s of project & process

due to the

diversity of work,

firms,

contracts & projects

teams

No answer was given

No answer was given

No answer was given

No answer was given

No response

was given

There are many

factors

could affect the

operating

plan such as project

start up

delays, change of

business

plan and future

resources.

No response

was given

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Q79 What methods did you use to carry out the project during the conceptual and prefeasibility phases? Open

discussion,

meetings and

technical

workshop

Meetings &

workshops

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Meetings

and

workshops

Workshops

varied

according to the needs

of the

project

Meetings Workshops Meetings

and

workshops

Meeting,

PowerPoint

slides, boards and

open

discussions

Meeting

and

workshops

Workshops Meetings

Q80 What percentage of time did you spend on function analysis during the early stages? No answer

was given 30% No answer

was given No answer was given

No answer was given

No answer was given

No answer was given

26% to 50%

No answer was given

No answer was given

No answer was given

No answer was given

No answer was given

Technical team can

answer this

question

No answer was given

Q81 What did you do for the cases for which you did not use function analysis? No answer

was given

With or

without

analysis we had to a

find way

out to take the project

to the next

level during construction

phase.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Sometimes

external

stakeholders & project

objectives

dictate requirement

s that have

to be met regardless

of the

analysis.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Technical

team can

answer this question

No answer

was given

Q82 How did you select functions for the project? Previous

projects

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Life cycle

cost

models.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Technical

team can


No answer

was given

Q83 Which function analysis techniques did you use? Comparing

with

previous projects

Numerical

analysis and

evaluation

Compariso

n

Comparing

items and

equipment

No answer

was given

No answer

was given

No answer

was given

Comparativ

e

evaluation

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Technical

team can


No answer

was given

Q84 Which function analysis technique did you use in the evaluation stage to compare alternatives? Comparing

with previous

projects

Data

evaluation and

comparison

Compariso

n but at the project

early stages

the project manageme

nt

department had

received

inaccurate financial

model

analysis report from

the finance

department, which

was not

around +-10

Comparing

items and equipment

No answer

was given

No answer

was given

No answer

was given

Evaluation

by comparison

.

No answer

was given

No answer

was given

No answer

was given

No answer

was given

No answer

was given

Technical

team can answer this

question

No answer

was given

121

4.4 Analysis of Responses

This section represents the analysis of the responses given by the interviewees of the

gold subsidiary, the aluminum subsidiary and the headquarters.

4.4.1 The definition of mega engineering project in the mining field at

the early stage (Questions 3-6)

Six senior directors and managers of planning and executing project management team

were asked a series of questions about the Mega-project’s development and execution

phases.

4.4.1.1 The gold subsidiary responses to a definition of mega-project in mining

field at the conception phase

Interviewees from the gold company were asked about the mega-project definition and

image at the beginning of the project.

Interviewee 1 stated that the company had 8 mining projects and the cost and the size

defined the mega-project. He added that the company and project teams had lacked a

theoretical and professional image of megaproject at the conception and prefeasibility

phases. Interviewee 3 stated that it was hard to visualize the mega-project processes at

the conception and prefeasibility phases. Interviewee 2 defined the megaproject based

on the difficulties, technology used and project budget. He added that the meg-project

had been difficult to visualize and implement without the support of the technology

providers and designer especially at the conception and prefeasibility phases. He stated

that the meg-project was driven by technology, experience and expertise in the mining

field, and measured by the quantity of the mineral resource and had needed a good

project definition. He added that the project had used traditional project management

122

delivery which was the just-in-time project delivery type and parallel workflow models

to implement the project.

It seems, therefore, that there had been a lack of knowledge about the mega-project

processes at the early stages of the project and until the end of the prefeasibility phase.

In addition, the mega-project could not be defined and had not been properly

understood. The company had used the traditional project management processes to

deliver the project not the stage-gate process. The megaproject uncertainty and

ambiguity were high at the early stages. There had been full dependence on the

technology provider and project designer to visualize and implement the projects due

to the lack of expertise in the mining field from the owner side.

4.4.1.2 Aluminium subsidiary responses to a definition of mega-project in mining

field at the conception phase

When the aluminum company interviewees were asked about the mega-project

definition and image at the beginning of the project, their responses were considerably

different to those of the gold company interviewees.

Both Interviewee 8 and 10 stated the project capital cost was $10.8 billion dollars.

Interviewees 7, 8, 11 and 12 stated that the theoretical image of the mega-project was

ambiguous at the project early phases due to the lack of expertise and technology. Both

interviewees 7 and 8 agreed that the mega-project can be defined by the size of the

project and capital cost. Furthermore interviewee 8 added that parties involved and

technology can also define the megaproject. Unlike interviewees 7 and 8, interviewees

11 and 12 had defined the megaproject by cost. Both interviewee 7 and 8 stated that

the mega-project had been driven by engineering expertise and delivered by using

traditional project management process. The project director, interviewee 8, added that

the megaproject in the mining field at the early stages had been measured by

123

availability of resources, project scope and monitored weekly to adjust any deviation

from baseline. It seems, therefore, that the project image at the early stages was not

clear due to the size of the project and lack of expertise. There had been a lack of

defining the mega-project and visualizing the project scope, a lack of monitoring and

supervising the project activities and also almost total dependency on the main

contractor to visualize and manage the project activities during the early stages and

implement the project at the construction phase.

4.4.1.3 Headquarter’s responses to a definition of mega-project in mining field at

the conception phase

Higher management interviewees were asked about the mega-project definition and

image at the beginning of the project.

Interviewee 14 stated that the parent company had around 10 projects - some were

mega-projects and another were major projects. Both interviewees 13 and 14 stated

that a megaproject in the mining field is not always as glorious as people think it is.

The interviewees 13 and 14 added that the project cost and size defines the mega-

project.

It seems, therefore, that the company found difficulty to define and to visualize

megaproject at the early stages of the project lifecycle but agreed that the megaproject

could be defined in terms of cost and size.

124

4.4.2 Traditional project management process and stage-gate process at

early phase (Questions 7, 10, 44)

Six senior directors and managers of planning and executing project management team

were asked a series of questions about the mega-projects development and execution

phases.

4.4.2.1 Gold subsidiary responses to traditional PM process & stage-

gate process

The gold company Interviewees were firstly asked about what type of project process

at the mega-project concept and prefeasibility phase had been used by the company.

Interviewee 1 stated that the gold firm had used the traditional project management

processes for some time to implement company projects. However the stage-gate

process which had been introduced to the company recently to implement the design

phase of projects with the design contractor used the same stage-gate process as a

design evaluation tool. Interviewee 1 added that the stage-gate processes had been used

as tools to evaluate the three stages of the Front-End Engineering Design (FEED) for

basic design at the prefeasibility phase and detailed design at the feasibility phase but

had not been implemented for the rest of the project processes. Moreover there had

been difficulties at the early phases with the design evaluation and the selection of

contractors. Interviewee 4 added that the stage-gate process workshop with the leading

contractor had covered the three stages of design evaluation, as well as economic

parameters such as IRR, ROI & NPV, value engineering, HAZOPS and operability

study. Four of the interviewees (2, 3, 4, and 5) stated that the internal project

management team had lacked technical experience in the mining field, and lack of time

to study and evaluate the technical items that had been given by the company to the

125

project and consultant teams during the design phases. Both Interviewees 1 and 2

stated that the higher management had delayed the project stage-gate process approval.

It seems that the company had completely depended on the external technical

consultant and the main design contractor during the design phase process despite the

length of the design review period, design mistakes and differing views. Three

interviewees, 4, 5 and 6, agreed that project stakeholders such as operation and

maintenance had not been involved in the stage-gate process workshops and evaluation

of prefeasibility and feasibility phases of the design stages.

Both interviewee 1 and interviewee 2, who came from a mining engineering back

ground and experience, added that the theoretical process of the stage-gate process

needed modification in order to suit the mining sector and specifically their company.

Interviewee 2 added that the stage-gate process was not well identified.

It seems, therefore, that there was disagreement as to the application of stage-gate

process or chart among the project new comers who had had experience of

petrochemical and oil and gas projects.

Interviewees 1, 2 and 3 stated that the final approval from the board members for each

stage of the design phases had taken a long time, and even consumed time during the

analysis and evaluation stages. Interviewee 3, who had broad experience in the stage-

gate process, added that the stage-gate approval process from the board members at

the end of each design stage or what is called ‘gatekeeper’ evaluation stage was the

main cause for design changes at the basic and detailed design phases.

Figure 4.1 shows the problems arising from the replacement of the traditional project

management process with the stage-gate process especially in the design phases. The

percentages were calculated by giving each interviewee or a voter a unit weight equal

126

to 0.166. Thus, two voters had got a unit weight equal to 0.333, three voters had got

0.500 and four voters have got 0.666.

Figure 4.1: Gold company difficulties during design phases and stage-gate process

The problems included lack of technical expertise in the mining field, lack of allotted

time for design evaluation, lack of internal value engineers for the design phases, lack

of cooperation among the stakeholders during the design evaluation and approval, lack

of defining and understanding stage-gate deliverables and lack of knowledge of

mineral processing and operation, lack of stakeholders’ involvement from the

beginning of the project as well as lack of maintenance, operation and production team

involvement in the project process from the prefeasibility stage until the execution

phase, specifically at the design phases; in addition there was a lack of cooperation

between the project internal team and project main contractor from the beginning until

the execution phases.

Lack of technical expertise in mining field

18%

Lack of allotted time of design

evaluation17%

Lack of internal value engineers in design phases

17%

Lack of stakeholders involvement

from the begining of

project9%

Lack of cooperation

during the design evalution and

approval22%

Lack of understanding

minerlas processing and

operations 17%

GOLD COMPANY

127

4.4.2.2 Aluminium subsidiary responses to traditional PM process and

stage-gate process

The aluminum company interviewees were also firstly asked what type of project

process at the Mega-project concept and prefeasibility phase the company had used.

Four Interviewees (7, 8, 11 and 12) stated that the traditional project management

process had been the tool used to implement the mega-project during the concept stage.

However after signing the management contract, the project management,

procurement and construction became the responsibility of the main contractor due to

the lack of integrated megaproject management teams for the prefeasibility and

feasibility phases. Interviewee 11 and interviewee 12 added that traditional project

management was useful and adequate for operation companies that have medium-sized

projects, a small project management team and no future project plans.

Interviewee 7, who had had broad experience with petrochemical projects and stage-

gate process emphasized the importance of the stage-gate process and the need to link

the stage-gate process to the right discipline or department and team.

Figure 4.2: Aluminum company difficulties during design phases and stage-gate process.

Lack of technical expertise in mining field

28%

Lack of internal project

management team29%

Lack of linking the stage-gate

process to each mining discipline

43%

ALUMINUM COMPANY

128

It seems, therefore, that, as shown in Figure 4.2, there lacked an internal project

management team, there was a lack of technical expertise in the mining field,

unappropriated linking of the stage-gate process to key stage deliverables and some

disciplines, lack of applying and understanding the stage-gate process in the mining

field except for the design phase, difficulties implementing the stage-gate process for

mineral project and process.

4.4.2.3 Headquarter’s (business unit) responses to traditional PM

process and stage-gate process

The higher management interviewees at the business unit were firstly asked what type

of project process at the mega-project concept and prefeasibility phase the company

had used.

Both interviewees 13 and 14, who had had broad work experience in the oil and gas

projects, stated that the company had used traditional project management for

previous megaprojects at the concept and pre-feasibility phases but the rest of the

project processes such as feasibility, execution and start-up phases had been handled

by the main project management contractor. Both interviewees added that the company

with its subsidiaries had moved toward an integrated stage-gate process for the benefit

of the future projects. In response to a question about how did your organization make

decisions on building a new project, Interviewee 13 stated that board members and

higher authorities had made the decisions which then had been passed on to the related

subsidiaries after having been studied.

It seems, therefore, that, as shown in Figure 4.3, the company suffered from a lack of

in-house technical and non-technical experts in the field of mining, lack of mining

project engineers and ineffectiveness of traditional project management processes in

the mining mega-projects.

129

Figure 4.3: Higher management views of stage-gate process and traditional project management

In conclusion, a comparison of the results of Figures 4.1, 4.2, 4.3 show that the

company faced obstacles with the stage-gate process for the mining field: shortage of

technical expertise in the mining field, a lack of internal project management team for

the mining field, ineffectiveness of traditional project management processes in the

mining mega-projects, unappropriated linking of the stage-gate process to key stage

deliverables and some disciplines, absence of value management engineers and mining

engineers, delay in design assessment approval decisions, a lack of cooperation among

all of the stakeholders, a lack of defining and understanding stage-gate deliverables for

mining projects, a lack of cooperation during the design evaluation and approval, a

lack of allotted time for design evaluation and finally a lack of cooperation and

communication between contractors and the owner project team.

Ineffective traditional

project management process in the mining mega-

project34%

Lack of in-house technical mining

engineers 33%

Lack of project management

teams33%

HIGHER MANAGEMENT (BUSINESS UNIT)

130

4.4.3 The mega-projects scope of work and scope creep (Questions 12–

15–24, 27)

4.4.3.1 Gold subsidiary responses to project scope creep

The Interviewees of the gold company were asked questions with regard to scope and

scope creep from the beginning of the project lifecycle.

Interviewee 1, an executive, stated that they had done scope changes or change orders

once or twice a month for 22 months of the project. Interviewee 2 stated that scope

creep was considered as a major ongoing cost for the megaproject. Both Interviewees

1 and 2 stated that inaccurate information of ore data (quantity and quality) at the

conception phase caused a scope creep at the design phases. Interviewee 1 added that

the basic design at the prefeasibility phase and detailed design at the feasibility phase

had had serious problems due to inaccurate information concerning raw materials or

ore deposit at the initiation or concept phase. Both interviewees 4 and 5, who were part

of the project control and execution team, agreed that the project scope of work had

not been defined precisely at the concept and prefeasibility phases. Interviewee 3

stated that the major cause of scope creep or scope change had been the owner. He

added that the contract awarding mechanism, based on low price as well as the

different thoughts of the project team, had caused scope of work creep and had led to

changes and delays in the project execution. One of the project control representatives,

Interviewee 6, stated that the contractor or design consultant bore a large part of the

responsibility for scope creep at the prefeasibility phase due to a lack of knowledge of

the local market and due to implementing the basic design in offshore offices without

following up with the internal project team according to the contract awarding

mechanism agreement. Figure 4.4 shows the reasons for scope creep.

131

Figure 4.4: Reasons of scope creep in the gold mining company projects

It is clear that, as shown in Figure 4.4, the scope creep in mining gold company projects

had occurred for different reasons: firstly an inaccurate measurement of raw material;

secondly, lack of internal technical team; thirdly inaccurate design information;

fourthly inappropriate contract awarding strategy and negotiation of contract clauses

especially for the location of the design and design teams; fifthly the inexperience of

contractors and subcontractors in the local market and unproven previous work

experience in the fields of engineering, procurement and construction (EPC contract);

sixthly poorly-defined scope and scope of work change by the owner had taken place

at various stages of the project lifecycle. Finally the responses showed that project

planning and inter-disciplinary communication among the stakeholders had been

ineffective.

Lack of data accuracy of ore

blocks at conception phase

25%

Poor definition of scope of work at concept phase

39%

Lack of experience and knowledge of contractors

25%

Lack of internal technical team

13%

GOLD COMPANY

132

4.4.3.2 Aluminium subsidiary responses to project scope creep

When the Interviewees of the aluminum company were asked questions with regard to

scope and scope creep from the beginning of the project lifecycle, their responses were

considerably different to those of the gold company interviewees.

All interviewees agreed that there were ongoing change orders during the project

lifecycle. Interviewee 8, the project director, stated that the company had changed the

scope of work of the megaproject more than 5 times during the construction phase and

many times during the basic and detailed engineering stages. Interviewees of the

aluminum company listed 17 reasons which had caused the project scoop creep from

the concept phase until the start-up of the project. Six of the interviewees agreed on 6

reasons which had caused scope creep. The six interviewees (7, 8, 9, 10, 11 and 12),

three of them representing the project execution team and two of them being the main

project partners, agreed that the main design-build contractor had complicated the

project progress during the prefeasibility and feasibility phases. They added that lack

of local mining contractors, mining services and mining vendors had contributed as a

cause of project change orders and changed scope of work. Another five interviewees

(8, 9, 10, 11 and 12) agreed that the scope creep had occurred due to lack of project

supervision. The latter occurred due to lacking an internal project management team

and internal technical team. A further two interviewees (11 and 12), the project

partners, stated that the project scope creep had occurred due to different reasons such

as contract agreement with the owner, contract agreement with the technology provider

and amended project scope by the owner at different times of the project’s life.

Interviewee 11, a main partner and a representative at the higher management level,

and another interviewee 10, the representative of the owner in the department of

finance, stated that the transformation of megaproject from construction to operation

133

had caused the scope creep and cost overrun due to several reasons one of which was

a lack of high-tech expertise in mining operations especially expertise in start-up of

high-tech mining equipment. This could have been due to the limited number of

experts who had had expertise in modern mining operations; the new trainees also

could not manage the integration phase from end-stage project to production. Both

interviewees (10 and 11) added that inaccurate raw material information and

inaccurate project information at the concept and construction phases had caused scope

creep and change. Interviewee 10, the finance Manager, added that inaccurate cost

estimation information from the main contractor during the construction phase had

caused the scope creep. Both interviewees (10 and 11) stated that the unstable supply

of utilities such as gas, electricity and water at any stage of the project lifecycle had

been another cause of change of scope of work.

In addition the interviewees listed 9 management actions that had caused the scope

creep. The project partner, interviewee 12, who represented the planning department,

mentioned that the poor project planning and the delay of board members’ approval at

each stage of the stage-gate process had caused project delay. In his turn, the project

director for the execution phase, Interviewee 9, stated that scope creep had occurred

for different reasons: lack of government cooperation with the company during the

conception and construction phases regarding land conflicts around the project

location and issuing of licenses. Interviewee 10 stated that the owner had caused the

project scope creep many times from the beginning of the project and at the

construction phase in order to increase the project capacity. Interviewee 11 stated that

the delayed bank loan caused scope creep due to inaccurate ore block estimation and

tryout of the newest unproven technologies had caused project delay at the

construction phase.

134

It seems therefore that many change orders or scope creep had occurred during the

project lifecycle (see Figure 4.5). The differing reasons provided could have been due

to the fact that one interviewee (10) was in the finance area, two interviewees (11, 12)

were project partners, two interviewees (8, 9) were project directors at the construction

phase and one interviewee was the head of the company. It is axiomatic that the change

scope of work and the scope creep are still major issues in the world of project

management.

Figure 4.5: Reasons of scope creep in mining aluminum company projects

In conclusion, the project scope creep and project change order in mining aluminum

company projects had occurred for different reasons: lack of accuracy of ore block

information, lack of experience and knowledge of design contractor at the

prefeasibility phase, lack of local mining contractors, lack of expertise in the mining

field, lack of internal project management team in the mining field and poor planning

at the prefeasibility phase from the owner side and the unplanned extra requirements

added to the project at the construction phase.

Lack of experience and knowledge of design-build contractor

16%

Lack of local mining

contractors16%

Lack of expertise in mining field

21%

Lack of internal project

management team13%

Owner responsibility and

poor planning16%

Contract agreements and

conditions8%

Lack of accuracy of ore block information

10%

ALUMINUM COMPANY

135

4.4.3.3 Headquarter’s (Business unit) responses to project scope creep

Different responses to those provided by the gold and aluminum company

interviewees were provided by the interviewees of the higher management (business

unit) at the headquarters when asked about scope and scope creep from the beginning

of the mega-project lifecycle.

Interviewees 13 and 14 represented the top-level management at the corporation

headquarters; they stated that shortage of contractors and subcontractors in the mining

field, poor knowledge of the local market by contractors and a lack of knowledge of

modern mining technology by contractor/ supplier/ vender were the main reasons for

scope creep and for the project failing to meet business objectives and implementation

deadlines. Interviewee 14 added that scope creep had occurred due to poor planning,

while interviewee 13 stated that scope creep had occurred due to delay of project loan

and imposition of board members’ decisions on the company strategy and on an award

contractors. The representative of contracting department, interviewee 15, reported

that each project is unique and contract agreements vary from project to project, and

scope creep may occur as a result of the contract strategy or clauses; however, to avoid

such events, he stated that unit price contract strategy could be used in some cases such

as unknown project scope of work and unknown modern technology.

Therefore it is clear that mega-project scope changes in the mining corporation projects

had occurred due to several reasons; most of the difficulties, it was reported, had

occurred because of lack of expertise in the mining field, lack of organization transition

process from government to public, poor planning in the concept and prefeasibility

phases, non-incomplete contracting agreement and clauses, a lack of the proper

contractor /supplier /vendor /fabricator for mining projects and lack of control over

subcontractors in the site preparation stage and construction phase.

136

Figure 4.6 shows that the scope creep causes were: lack of proper project planning,

lack of expertise in the mining field, lack of internal project management team,

inappropriate intervention of the owner in strategy and contract awards, and finally

problems arising from contract management planning strategy, clauses and

contractors. These interviewees, of course, were not involved in technical issues due

to their position in the hierarchy.

Figure 4.6: Reasons of scope creep from the perspective of higher management at the

headquarters

In conclusion, the results shown in Figures 4.4, 4.5, 4.6 show that the company had

faced technical and nontechnical hitches with the project scope of work and project

change orders caused by: inappropriate contract strategy, contract award mechanism,

imposition of unqualified contractors on the company by the owner (the government

and higher management) especially the main contractor and some of subcontractors,

owner intervention in decision making, lack of data accuracy at the conception phase,

lack of mining expertise, lack of internal project management team, lack of mining

Lack of proper planning at

concept phase25%

Lack of expertise in mining field

25%

Owner intervention

25%

Contract strategy and clauses

25%

HEADQUARTERS (BUSINESS UNIT)

137

engineers, poor quality project definition and poor project planning and lack of local

mining contractors.

4.4.4 The Contract strategy and award mechanism (Questions 8,10,22,43

to 56)

4.4.4.1 Gold subsidiary responses to contract award mechanism and

strategy

Interviewees of the gold company were asked about the reasons for lack of

effectiveness of contract award mechanism and strategy for previous megaprojects.

These interviewees stated that most of the project contract strategies applied locally

were either EPC/LSTK or EPCM/LSTK type of contract.

The risk management manager, Interviewee 6, stated that a choice of contract strategy

is essential and must be considered carefully in order to avoid unnecessary rework

during project lifecycle and to prevent the project from not being completed.

Interviewee 1, as an executive, stated that there had been serious problems with the

project clauses and contract type.

Two members of the project execution team, interviewees 3 and 4, stated that the

EPCM type of contract had not been successful locally, while a project developer,

interviewee 2, stated that the EPC type of the contract was the usual one used for the

implementation of their projects. The representative of the quality control department,

interviewee 4, stated that the use of the EPCM type of contract had caused many

project change orders. He explained that there had been delays in the execution of the

project due to delays related to contractor mobilization to the project location after

signing the contract. Interviewee 5 compared? the two main types of project contract

strategies and stated that in the EPC contract, the full risk lay on the contractor but the

138

company could not change any order after it had signed the contract, while in the

EPCM contract, the contractor was responsible for the project design and if there were

a design delivery delay, it could cost the project.

Interviewees 1, 2 and 3 stated that the traditional procurement contract (Design-Bid-

Build) based on the lowest bidder or price for billions of dollar mega-projects was an

ineffective system and needed to be changed or improved. Figure 4.7 shows the

ineffectiveness of contract award mechanism and strategies for the previous projects.

Figure 4.7: The reasons for the ineffectiveness of contract award mechanism and strategy in

mining gold company projects

It seems, therefore, that, as shown in Figure 4.7, the effectiveness of the gold

company projects had been affected by the contract strategy, contract clauses, and

contract process award; moreover, the procurement contract of the traditional

procurement system had caused project delays and had impacted on the course, events

and scope of the project.

Lack of choosing the right type of

contract41%

Incomplete clauses in the

contract17%

Ineffectiveness of traditional procurement

system (Design-Bid-Build)

17%

Ineffectiveness of EPCM contract

25%

GOLD COMPANY

139

4.4.4.2 Aluminium subsidiary responses to contract award mechanism

and strategy

Responses from the interviewees of the aluminum company with regards to the reasons

for lack of effectiveness of contract award mechanism and strategy for previous

megaprojects provided their perceptions with regards to their own projects on the

mega-project.

Interviewee 8 stated that the company had had two EPCM contracts with leading

companies, two EPC contracts and one EPC/LSTK contract. He added that the cost of

change orders in the EPC/LSTK contract had been higher than the change order costs

with the EPCM contract. The project financial manager, interviewee 10, and a project

director, interviewee 8, stated that the type of project contract affects project cost

estimation but unlike EPC, the EPCM contract had allowed changes during the project

lifecycle. For example, it had allowed expansion of a part of the project and addition

of new technology during the construction phase.

Interviewee 8 stated that EPC/LSTK contract strategy was preferred for services and

small projects. However, the drawback, he stated, of the EPC/LSTK contract was the

fixed price and impossibility of changing or adding anything after signing the contract.

Interviewee 9, a project director, stated that the project had faced a major risk with the

EPC/LSTK contractor who had been declared bankrupt in the middle of the

construction phase.

Interviewee 12, project partner and planner, stated that the EPC contract agreement

and clauses had not considered some conditions and had affected the project started-

up phase specifically at the mechanical completion stage as a result of the exclusion

of this part of the contract clauses.

140

Regarding the traditional procurement contract system, Interviewee 8, project director,

stated that the traditional procurement contract system was not effective due to the

conflict of interests and relationships that had affected the final decision-making.

Interviewee 12, project partner and planner, stated that the project owner had inserted

a series of difficult contract conditions during the contractor’s invitation to bid; these

included squeezing contract time, budget, schedule, and unrealistic construction and

delivery time of suppliers.

Therefore it is clear that the contract type, agreement, clauses, invitation to bid and

mechanism of contract award all contributed to project delay and scope creep. Figure

4.8 shows the ineffectiveness of the contract award mechanism and strategy used in

the aluminum company projects.

Figure 4.8: The ineffectiveness of contract award mechanism and strategy in mining aluminum

company projects

It seems, therefore, that, as shown in Figure 4.8, the aluminum project had faced

difficulties with the two types of contracts which were the EPC and the EPCM; there

Ineffectiveness type of contract

20%

Ineffectiveness of EPC contract

20%

Incomplete clauses in the

contract…

Unrealistic contract terms by the owner

20%

Ineffectiveness of traditional procurement

contract10%

Ineffectiveness of EPCM contract

10%

ALUMINUM COMPANY

141

had been incomplete clauses and terms, an ineffective traditional procurement contract

and award system and finally unrealistic contract terms by the owner.

4.4.4.3 Headquarter’s (Business unit) responses to contract award

mechanism and strategy

Interviewees of higher management at the headquarters were asked, too, about the

effectiveness of contract award mechanism and strategy for the previous megaprojects.

All interviewees agreed that most of company project had used either EPCM or EPC

contract. Interviewee 15, director of contracts and procurement, added that the unit

rate contract was a third type of contract only used when the project scope was

unknown when, for example, the engineering rate and non-estimated quantity of

technical items were unknown. Interviewee 15 added that the most important contract

clauses for the megaproject had been the performance guarantee, governor law,

attribution rule, insurance, acceptance of conditions, testing of technology, change in

market and variation procedure. He then highlighted that time, team, market, i.e.

booming, location, weather and quality had been the main factors that had affected the

course of the project. Both interviewees 14 and 15 stated that the flexibility of the

project’s contract had largely been unrealized.

It is very clear that the type of contract, clauses, insurance, agreement, market change,

project team, contractor, insurance, governor law, attribution rule, location, weather

and quality of technology at the conception and prefeasibility phases had all

contributed to mega-project delay and scope creep.

In conclusion, the results show that the company had faced difficulties with the

contract strategy and clauses. Both the gold and the aluminum companies faced

technical hitches with both types of contracts either EPCM or the EPC, but more with

the EPCM. Both companies agreed that the traditional procurement system had not

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been effective. Moreover the gold and aluminum companies agreed that the contract

conditions and terms had not been adequate, or as effective as required. Both

companies placed part of the blame for contract problems on the owner.

4.4.5 The basic engineering design and detailed engineering design

phases (Questions 10, 11–14–28–40, 74 and 76)

4.4.5.1 Gold subsidiary responses to basic and detailed engineering

design

The gold company interviewees were asked about the difficulties during the design

stages or FEED at the beginning of the mega-project.

Interviewee 2 stated that basic engineering design was the second most important

phase for the project after calculating ore quantities and quality. He added that the

allocation for Front-end Engineering Design (FEED) and planning from overall capital

cost of the project was 30%.

Interviewees 1, 2, 3 and 4 stated that the contractor had handled everything including

the design phase due to the project contract strategy. However the internal project

management team had conducted three stages of the design revision with the main

designer and value management consulting firm. All interviewees agreed that the

project had faced hurdles during basic engineering design and detailed engineering

design.

Three interviewees, 3, 4 and 5, stated that there had been a lack of technical expertise

in technical project management, value engineering and hence the design phase could

not be followed up properly with the awarded design company and the professional

external technical team (consultant).

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The representative of project control, Interviewee 4, added that design process and

design approval from board members had taken a long time.

The project manager, Interviewee 5, stated that the design was one of the

responsibilities of the main contractor and the delay in submitting design packages had

resulted in schedule delay and extra cost. He added that the lack of detailed design and

modification had caused delays in inviting construction bidding. He pointed out that

the owner’s design bidding plan, design bidding time and pre-review time of design

before holding the design evaluation workshop had been unsatisfactory. Interviewees

1, 2, 3 and 5 stated that the completion date for some of the projects had been delayed

due to the lag of time between project activities.

It is clear from these results that there had been less than optimum efficiency with

regards to the basic engineering design caused by design failure or errors during the

prefeasibility phase. There had obviously been a lack of an internal design team, an

internal value management team with their related technical expertise; in addition there

had been a poor bidding plan and lack of review of design conditions. There had also

been a lengthy design process and review and a delay in decision-making on the part

of the owner and senior management for the three design stages in the prefeasibility

and feasibility phases. Figure 4.9 displays the gold company project difficulties at the

design phases or FEED.

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Figure 4.9: The difficulties during the design phases or FEED at the beginning of the gold

company mega-project

It seems, therefore, that as demonstrated in Figure 4.9, the gold company had faced

technical hitches during the design phases in the prefeasibility and feasibility phases.

These difficulties had been a lack of internal design and value engineering teams in

the mining field, delayed design assessment and approval by the senior management

and delayed design packages by the designer; these in turn had led to project delay

especially at the construction phase.

4.4.5.2 Aluminium subsidiary responses to basic and detailed

engineering design

The aluminum company interviewees were also asked about the difficulties during the

design stages or FEED at the beginning of the mega-project.

Interviewee 8, a project director, stated that the mega-project had had 40 detailed

engineering design packages at different times amounting to 50 million man hours.

Interviewee 10, a representative of the finance department, explained that design

Lack of internal design and value

engineering teams50%

Delay of design assessment and

approval by senior

management16%

Delay of design packages by the

designer17%

Poor design bidding plan and

time by the owner

17%

GOLD COMPANY

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packages had been distributed among the three leading companies and under the

supervision of a leading contractor. All Interviewees agreed that the design stages had

exceeded the expected time due to many complicated factors. Interviewee 11 and 12

specified that the design delay had occurred due to lack of proper planning.

Interviewee 8 pinpointed the leading designer as being the main cause of the design

deficiencies and other causes had been the design changes from prefeasibility phase

until the construction phase by the technology provider, the design consultant, the

technical project management team and the internal and external technical teams.

Interviewee 8 stated that operation and maintenance teams had not been involved in

the design information loop from the early stage of the project. He pointed out,

furthermore, that the designer had not considered the importance of fine details in the

design of the mega-project such as accurate weather information for the project

location.

The results show that there had been missing design details, design changes, delayed

designs, noninvolvement of technical expertise in the design phase especially the

operation team, production team and maintenance teams, internal project management

team at the prefeasibility phase, lack of internal technical expertise and lack of value

engineers in the design phase. Figure 4.10 displays the difficulties during the design

stages or FEED at the beginning of the aluminum company mega-project.

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Figure 4.10: The difficulties during the design stages or FEED at the beginning of the aluminum

company mega-project

Figure 4.10 shows that the aluminum company had faced technical and nontechnical

difficulties during the design phases in the prefeasibility and feasibility phases such as

delayed design packages by contractors, noninvolvement of operation and

maintenance teams in the design phase, inadequate design by the contractor, lack of

internal design team and value engineers and poor planning.

4.4.5.3 Headquarter’s (Business unit) responses to basic and detailed

engineering design

Higher management interviewees at the headquarters were asked about the difficulties

during the design stages or FEED at the beginning of the mega-project.

The representative of project control and risk management, interviewee 14, stated

succinctly that most of the stakeholders’ input, feedback, and work experience had not

considered the inclusion of maintenance and operation teams during design evaluation

workshops after they had signed the contract with the leading design company.

Delay of design packages by contractors

25%

Lack of involvement of all stakeholders

in the design phase14%Design deficiency

by the contractor25%

Lack of internal design team and value engineers

38%

ALUMINUM COMPANY

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Interviewee 15 stated that the project’s design and construction had been assigned to

different leading firms. Interviewee 13 stated that most of the mega-projects and major

project if not all of them had faced difficulties at the detailed design phase.

In conclusion, the results show that both the gold and the aluminum companies agreed

that there had been a lack of contribution from an internal design team and value

engineering team, and delay in receiving design packages which, when ready, had been

found to be inadequate. The gold company results show, moreover, that there had been

a delay caused by the higher management in assessing and approving the design

assessment, poor design bidding planning and unrealistic conditions placed by the

higher management. The aluminum company results show, too, that the operation and

maintenance teams had not participated in the design workshops at the prefeasibility

and feasibility phases.

4.4.6 Software and tools at the mega-project early stages (Questions 30

to 37)

4.4.6.1 Gold subsidiary responses to mega-project software programs

Interviewees of the gold company were asked about the software programs and tools

that had used in the project early stage.

Both Interviewees 1 and 2 stated that they had faced difficulties during the concept

phase due to inaccuracy of raw material information and inaccuracy of software

programs/tools. Interviewee 1 added that usually the main contractor had taken charge

of calculating the quantity and quality due to the expensive price of mining software

programs.

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Interviewee 2 added that the mining company had needed a user-friendly mining

software program, one that was accurate, reliable and could estimate the cost of ore

deposits. However, these programs, he added, were expensive.

It seems that lack of an ore deposit calculating software program and project tools may

have added to the difficulties experienced by the project stakeholders.

4.4.6.2 Aluminium subsidiary responses to mega-project software

programs

The Aluminum company interviewees were asked about the software programs and

tools that had used in the project early stage.

A project director, Interviewee 8, stated that the benefits of using software programs

are that all of the information is available at the press of a button. Both project partners,

Interviewee 11 and 12, stated that the accuracy of ore deposit information including

quality and quantity estimation needs to be close to actual cost estimation. Interviewee

11 added that for the mining industry, banks want documents stating the quantities of

mineral resources and project life expectancy in order to facilitate any loan. As

mentioned previously for the gold subsidiary interviewees, there is a choice of

software programs but the cost is high. Generally, though, Interviewee 8 said, the

mining programs were considered affordable in the context of the size and the budget

of the mega-project.

Interviewee 8 stated that there had been no unified program for the construction phase

to bring all the stakeholders or contractors’ activities under one click. However, each

contractor company, subcontractor and fabricator had its own software programs in

every discipline. Moreover it was hard to connect all internal stakeholders’ software

programs with different departments’ programs under one project and one roof.

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Interviewee 8 stated that a major drawback of using software programs was the data

needed to be maintained regularly, otherwise the tool would be ineffective.

Interviewees 7, 8 and 10 stated that the company itself had lacked cost estimation

programs, ore block calculator program and tracking procurement program during the

construction phase. However, some of the contractors, he said, had different versions

of these kinds of programs but they were not user-friendly. Interviewee 8 added that,

for example, the main leading contractor had used a program called ‘Matman’ to track

mega-project procurements at the construction phase. The representative of the finance

department, interviewee 10, added that the company had used the traditional

comparison of previous projects to estimate the project cost at the prefeasibility and

construction phases.

It is clear that there was a lack of ore block data gathering program for project cost

estimation at the concept phase, lack of procurement tracking program during the

construction phase and lack of IT technicians to run such programs.

4.4.6.3 Headquarter’s (Business unit) responses to mega-project

software programs

Higher management interviewees were asked about the software programs and tools

that had been used in the project early stage.

Interviewee 14 stated that cost estimation and profit are the most important elements

for any business. Therefore directors must have accurate information to make their

decisions, measure the gross margin, make optimal choices and value the assets. Both

Interviewees 13 and 14 stated that the main contractor of engineering, procurement

and construction provided the project with 3D building modelling at the concept and

prefeasibility stage. Interviewee 14 highlighted that the corporation and its subsidiary

used different programs on different levels of project lifecycle such as AutoCAD, a

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traditional mining software program, traditional risk tools and a traditional cost

estimation tool. Both interviewee 13 and 14 added that some of the mining programs

were expensive and needed a training budget. The main contractor, too, was

responsible for the procurement tracking (interviewee 15).

In conclusion, it was found that the corporation did not use accurate software programs

to calculate the quantity of mineral raw materials in the concept phase and before the

design phase as a result of the high costs possibly also due to the lack of technicians

to run such programs. The company did not use a software program to track project

procurements during the construction phases for the same reason. The company had

used a traditional tool to estimate the project cost during the prefeasibility phase and

construction phase such as cost comparison of the previous projects and equipment.

4.4.7 Value engineering or value management at the prefeasibility and

feasibility phases. (Questions 38-41)

4.4.7.1 Gold subsidiary responses to value engineering or value

management

Interviewees of the gold company were asked about the value engineering or the value

management that had been used in the project early stage.

Interviewee 1 stated that the gold company had complied with international standards

for value engineering to evaluate the design HAZOP at three stages. Interviewees 1, 2

and 3 added that the company had earmarked budget for an external value engineering

consultant to review and evaluate the design phases with the project designer and the

internal project team in order to avoid any difficulties in the advanced stages of the

project’s life. Interviewees 2 and 4 stated, however, that the internal value management

team had lacked experience in value engineering. Possibly the owner’s internal team

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had not obtained the value management international certificate for analysis and

workshops and hence had had to rely on the value engineering external consultants.

Interviewees 4 and 5 stated that the purpose of value engineering workshops, run by

the value engineering consultant, owner and mega-project designer, was to evaluate

project items and functions with best cost at three intervals during the project.

Interviewees 5 and 6 added that the value engineering for design review and evaluation

was important but it did not include all the stakeholders, e.g. the operations staff. It

seems that the gold company engineering team had lacked value management

knowledge and experience, and hence the reason for being isolated from the value

engineering workshops.

4.4.7.2 Aluminium subsidiary responses to value engineering or value

management

Two interviewees of the aluminum company had answered the questions about the

value engineering or the value management that had been used in the project at the

early stage.

Interviewee 8 stated that the percentage of time spent on using value management

evaluation at the early stages of the project life cycle was around 51 % to 75 %. It

seems that the value management workshops during the project early stages had

consumed a large part of the project life cycle. The project partner, interviewee 12,

stated that value engineering workshops had focused on cutting cost and had ignored

the value of the items. Interviewee 12 added that the value engineering workshops at

the megaproject early stage must optimize the project equipment. He stated that value

engineering evaluation was a hurdle for projects due to consuming a large part of the

design phase.

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It seems that the value engineering workshops had become a hurdle instead of

facilitating the project process at the early stages and this had occurred due to a lack

of a dedicated value engineering team, a lack of defined the internal project

management team roles and responsibilities during the design phase.

4.4.7.3 Headquarter’s responses to value engineering or value

management

Higher management interviewees were asked about the value engineering or the value

management that had been used in the project early stage.

Interviewee 14 stated that they considered themselves to be a startup operation

company in the world of mining and hence needed to work closely with expertise in

every field both internally and externally especially during future projects’

prefeasibility and planning phases. Both interviewee 13 and 14 agreed that the

company subsidiaries had used value engineering during the design phases with a

designated budget.

4.4.8 Mega engineering project cost estimation (Questions 58, 59)

4.4.8.1 Gold subsidiary responses to mega-project cost estimation

Interviewees of the gold company were asked about the meg-project cost estimation

procedures and techniques.

Interviewee 2 pointed out that the gold company had depended on the accuracy of the

main contractor when estimating the cost of the mine, project and equipment due to

the lack of accurate tools, personnel, especially and technicians with expertise in the

mining field. He added that the company had needed an accurate and reliable cost

estimation for mine and mine equipment to construct the project. The ore information

needed accurate resources, budget and mining expertise to make decisions and had

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been collected by the main contractor in geology and mining fields. Interviewee 5

stated that they had been aware that the project cost estimation could increase at any

stage of the project lifecycle and had in fact occurred during the prefeasibility phase

due to the delay in submission of project design packages by the designer. Interviewee

3 added that the financial report during the business study in the concept phase was

not accurate due to inaccurate calculation of ore deposit at the concept phase.

It seems that, although relying on the expertise of the contractors, it was found that

some of the cost estimations at the project early stages had been incorrect.

4.4.8.2 Aluminium subsidiary responses to mega-project cost

estimation

Interviewees 7, 8, 10 and 12 of the aluminum company stated that they, too, had used

a contractor to estimate the project. The project cost estimation at the project’s early

stages had been obtained by making a comparison, market study and evaluation of the

previous projects, items and technologies, and by calculating the actual ore deposit at

the project’s early stage. Interviewee 7 stated that a monthly cost estimation was one

of the most important parameters to measure the progress of any megaproject at the

construction phase and the main project management contractor had provided the

owner’s finance department with a monthly cost estimation as a reliable benchmark as

it was his responsibility according to interviewee 10. The cost estimation report,

according to interviewee 10, had been presented to the CEO once every six months

before the construction phase and fortnightly during the construction activities in order

to avoid project over cost due to any project change orders. He added that during the

construction activities, the project contractors’ estimates had been the main source of

information for the owner and the decision makers. Interviewee 10 added that the

project cost estimation had been affected by the project location, site condition,

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contract strategy and rising energy prices. The finance manager stated that the cost

inflation may occur in any mega-project if all the plants and projects belonging to the

megaproject start at the same time.

Again, as with the gold company, the main contractor took responsibility for

estimating the costs.

It seems, therefore, that the company faced technical and non-technical hurdles when

calculating the cost estimation at the conception and construction phases due to the

lack of appropriate tools for the cost estimation and due to the reliance on traditional

methods and contractors to collect information and to estimate the cost during the

conception and construction phases.

4.4.8.3 Headquarter’s responses to mega-project cost estimation

The interviewees from headquarters did not mention the contractor having

responsibility for estimation of costs as did the interviewees from the gold and

aluminum subsidiaries. Instead they explained how important cost estimation is. For

example, Interviewee 14, the director in the headquarters, stated that cost estimation

and profit are the most important factors for any project and an accurate cost estimation

method helps decision makers of projects to visualize the project details, to measure

the gross margin, to make optimal choices, to value the assets and to manage the

projects successfully by assigning resources and developing a schedule. Interviewee

13 added that project cost estimation in the mining field had relied heavily on the

volume of ore deposit calculations at the conception phase.

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4.4.9 Mega engineering projects: function analysis (Questions 79 to 84)

Only the gold subsidiary and the aluminum subsidiary interviewees’ responses to the

technical questions such as function analysis at the conception and prefeasibility

phases.

4.4.9.1 Gold subsidiary responses to how function analysis had been

used at the early stages of the project cycle

Interviewees of the gold company were asked about project function analysis.

All the interviewees agreed that the project function analysis had been used at the early

stages. Interviewee 2 stated that the gold company team had spent 30% of the project

time allotted in the early stages on analysis of the technical items. Interviewees 1, 2, 3

and 4 explained how analysis had been conducted and that had been through the use

of numerical analysis and data evaluation through workshops and meetings to compare

the alternatives. However, despite the function analysis, Interviewee 3 pointed out that

the project management department had received an inaccurate financial model

analysis report from the higher management finance department, which was not around

+-10. Interviewee 2 pointed out, moreover, that during the construction phase they

had discovered that there had been items which had not been considered in the function

analysis.

It seems that, although, function analysis had taken place, there had still been

inaccurate information passed to the internal project management department.

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4.4.9.2 Aluminium subsidiary responses to function analysis at the

early stages of the project cycle

With regard to the aluminum company, it, too, had used function analysis at the early

stages; according to interview 8, 26% - 50% of time had been allotted to the analysis

of technical items especially before and during the design stages.

Both interviewees 8 and 11 stated that technical workshops and comparative

evaluation were the techniques used for function analysis to compare the alternatives.

Interviewee 8 added that sometimes external stakeholders and project objectives had

dictated requirements that had had to be met regardless of the analysis. He pointed out

the selection of functions for the project had been through the use of life cycle cost

models.

It is clear that both the gold and aluminum subsidiaries used similar traditional

techniques to analysis project functions and they depend heavily on the contractor and

consultant to analysis the project functions.

4.4.10 Mega engineering project team during conceptual or initiation

phase (Questions 37, 69 - 77)

4.4.10.1 Gold subsidiary responses regarding efficiency of the mega-

project team at the early phases

Interviewees of the gold company were asked about the project internal team at the

early phases.

The project had been run by the Vice President of project management from

headquarters and the CEO of the subsidiary (Vice president of the company). The

execution team operated under these two Vice Presidents. Interviewees 2, 3 and 4

stated that the contractor had managed the project phases from the prefeasibility phase

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until the delivery phase due to the contract strategy and had liaised with the internal

project management team (execution team). However, during the design phases,

according to interviewee 2, the company had had a lack of internal technical project

management staff to evaluate the project design with the designer company. He added

that the project had a lack of technical team to collect the raw material data, lack of

technical team to implement the project and lack of local operators in the mining field

to run the projects. Interviewee 6 added that the operation team had not liaised with

the internal and external project teams during the design phase at the early stages of

the project. Interviewee 4 stated that internal execution team had lacked experience in

mining equipment evaluation and design. Interviewee 2 added that the internal

execution team had lacked awareness or knowledge about this mining project. Both

interviewee 1 and 2 stated that the project external teams had had a direct influence on

design and ore calculation.

It seems therefore that efficiency had been compromised due to the company’s lack of

mining expertise in technical project management, design, value engineering,

construction and operation. There was also a lack of project definition, inconsistency

of implementer’s roles on the project, poor definition of project management team

responsibilities and individual job descriptions.

4.4.10.2 Aluminium subsidiary responses regarding efficiency of the

mega-project team at the early phases

When asked about the project internal team at the early phases, the aluminum company

interviewees’ responses were considerably different to those of the gold company

interviewees.

Interviewee 8 stated that the size of the internal and external mega-project management

team was around 80 to 120 members. Interviewees 7, 8 9 and 10 stated that the

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megaproject had lacked technical expertise during different project phases especially

the design phase. Interviewee 10 clarified that the mega-project had had five leading

companies and five project management teams, all working under the management of

the main mega-project contractor, adding that most of the internal project management

teams had not participated in the design review workshops at the prefeasibility and

feasibility phases. It seems that the contract type was EPCM; thus the project design

liability had rested with the designer and consultants.

Interviewee 10 added that the small number of allocated internal project team had

impacted negatively on the effectiveness of project and process. Interviewee 12

stressed the importance of that honesty and integrity of top management and project

team members during the project lifecycle especially at the conception, prefeasibility

phases and during procurements and the awarding of contracts.

The responses clearly affirmed that the company had had internal teams who had

insufficient technical and non-technical expertise in the mining field.

4.4.10.3 Headquarter’s responses with regard to efficiency of the

mega-project team at the early phases

Higher management interviewees were asked about the project team at the early

phases.

Interviewee 14 stated that each subsidiary of the company had many different sized

projects and thus an internal project management team is very important. He added

that the company had had an external project management team and also had its own

small internal technical team. He stated that there had been a lack of expertise in each

subsidiary. Interviewee 13 explained that employees had joined the megaproject to

gain more experience. The fact that employees wished to gain experience demonstrates

their lack of experience and possibly adequate knowledge in mining field at early

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project stages even if they had project management execution experience in oil, gas

and petrochemical projects.

4.4.11 Mega engineering project: market condition and external factors

affecting the mega-project (Questions 2, 61-64)

4.4.11.1 Gold subsidiary responses to market conditions and

external factors affecting the project

Interviewees of the gold company provided varying responses with regard to market

conditions and external factors affecting the mega-project.

External factors had related to the market boom and government procedures. On

account of the market boom at the time, there had been a shortage of manpower at the

construction phase (Interviewee 3). Interviewee 4 added that the market boom had also

caused logistical difficulties for the contractors who had had to operate in remote areas.

It had been difficult to find construction companies, subcontractors, fabricators,

manpower such as discipline engineers and project engineers and qualified experts in

the mining field to supervise and manage the new projects in the remote sites and these

factors had led to delays (Interviewees 3 and 5). Interviewee 5 added that, for these

reasons, the company and the gold and the aluminum subsidiaries had been forced to

deal with Asian companies which considered as a new and outlandish to the local

market and perhaps the reason for this was due to political relations between the two

countries, although there had still been a shortage of qualified manpower and expertise,

dealing with Asian companies complicate the project situation due to the lack of

commitment to international standards.

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Both interviewees 1 and 2 highlighted the fact that lack of government cooperation

had hindered the progress of the project implementation at some stages of the project

lifecycle especially in terms of the issuance of the project license.

In conclusion, many factors had affected the megaproject: the market boom had led to

a lack of a variety of qualified personnel; especially with regards to the remote sites,

had also been affected at the early stages and before the construction phase.

4.4.11.2 Aluminium subsidiary responses to market conditions and

external factors affecting the project

The aluminum company interviewees when asked about the market conditions and

external factors during project early stages provided responses that included many of

the factors provided by the gold company e.g. issuing project licenses by government,

lack of government cooperation, and lack of manpower, impose new contractor on the

subsidiaries projects (interviewees 8 and 9). Interviewee 7 stated that the company was

a new operational company that was driven by opportunity and had a long-term

product. Interviewee 9 added that the political stability is an extremely important and

there were political instability in the region around the project and could effect on the

mega-project especially at the point when the company had a lack of advanced

technology and technical expertise. Interviewee 10 stated that market study was an

important for cost estimation and market booming had led to increased project

contracts price.

These interviewees, therefore, highlighted uncertainty of market, uncertainty of

government cooperation, uncertainty of the labor law and possibility of changing at

any time, imposing unqualified contractors on the projects during the conception

phase, design and construction, preoccupation of top companies in field of

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manufacturing, project management and mining with other project in the region due

to local and regional market boom.

4.4.11.3 Headquarter’s responses to market conditions and external

factors affecting the project

Higher management interviewees were asked about the market condition and external

factors during project early stages. However their answer were

Interviewee 14 stated that regarding the products and new markets, if the subsidiary

want to obtain a project lone for the construction phase, it needs to sell out the product

and to provide banks with a proof for the volume of ore quantity. Moreover sometimes

the subsidiary needs expert leading companies in marketing field to look for a new

customers (countries) for the company products.

He added that some of the projects had faced a lack of government cooperation (e.g.

licenses had been delayed) and change in local market was one of the most important

contract clauses for their mega-projects. Interviewee 15 added that market conditions

had been one of the factors affecting the choice of the type of contract and the price

(which would be increased).

The main external factors related to the market that had affected the project had been

the government regulations and a lack of proper cooperation (e.g. delays in providing

licenses), bank loans, product marketing (geographical area, customer type), lacked of

construction contractor at the market boom, lacked of marketing experience to sell the

products, lacked of expertise in the mining fields.

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4.4.12 Mega engineering project: location and logistics (Questions 22, 67)

4.4.12.1 Gold subsidiary responses to mega-project location and

logistics at the conception phase

Interviewees of the gold company were asked about the megaproject location and

logistics.

Interviewees 1, 2 and 6 agreed that the company had faced serious difficulties with the

location, utilities, logistics and mobilization of contractors to the project location.

Interviewee 2 added that the location of the project and logistics were two of many

factors that had affected the success of the project. Interviewee 6 stated that the

logistical difficulties related to the project location in the remote area had been

considered a major risk of the project construction. The project developer, interviewee

2, stated that the project had lacked effective communication with the contractor and

subcontractor at the project location during the site preparation stage.

The responses indicate that there had been difficulties related to utilities (water and

electricity), logistics and mobilization of the contractor the remote area,

communication with site contractor especially the Asian companies. Therefore, It

obvious that the project location, utilities, mobilization of manpower considered as

major hurdles for the decision maker at pre-project stage, the conception and

prefeasibility phases pointing to a lack of management plan in the project site.

4.4.12.2 Aluminium subsidiary responses to mega-project location

and logistics

The aluminum company was located in a different location from the gold projects. The

aluminum company interviewees were asked about the logistics in regards to their

location.

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Interviewee 8 stated that the megaproject was a from-mine-to-port project or an

integrated complex that had been located in a remote area and lacked all the necessities

of life. He added that the project contained mine, plants, train, port, roads, bridges,

electricity station and buildings. He stated that the mega-project had faced risks and

difficulties in everything from roads to electricity to water to manpower even in

communication with authorities. Interviewee 9 stated, moreover, that during the

construction phase, the project had communication hurdles with the herders or the

nomads who had inhabited the project site and had had to provide compensation

adding to unexpected cost (as the herders lived a nomadic lifestyle they had not been

on the site at the time of planning). Providing compensation was, however, not well

received as these people wished to be able to travel from one location to another. He

added that the project had also faced years of interface difficulties with five

governmental authorities around the project location and had resulted in additional

expenditure during the construction phase for building bridges, fences and roads. The

project director, interviewee 9, stated that the project had had difficulties obtaining

project licenses from the government due to the presence of other owners around the

project location (as mentioned also by the gold company interviewees) as well as the

security issues related to the project. The project director, interviewee 8, stated that the

factors (e.g. lack of facilities and transport) related to the remote location were the

main difficulties affecting the success of the project.

Hence, it is clear that many difficulties, mainly related to location and logistics that

had had to be overcome during the implementation of the project. From the responses

it can be concluded that there had been delays in government delivery of project

licenses during the early stages of the project, lack of government cooperation, lack of

governmental authorities’ cooperation, lack of management interface plan, poor

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communication between the company, authorities and local community around the

project site, and logistical difficulties such as transportation to/from the remote area.

4.4.12.3 Headquarter’s responses to mega-project location and

logistics

Higher management interviewees were asked about the megaproject location and

logistics.

Interviewee 14 stated that it is extremely important to have a project next to the

facilities and resources, but in their mining projects all of the ore was located in remote

areas impacting, according to interviewee 13, contractor, logistics, construction and

product. Interviewee 15 explained that the project location had affected the choice of

type of contract and labor costs. .

From the responses it can be concluded that the selection of project site had a direct

and indirect impact on all project aspects and costs. It also had impacted on the

selection of the contractor and contract price, high labor cost, the prices of materials,

transportation, and price of utility, high cost of staff salary and on the final product.

The project had faced difficulties finding contractors to work in remote areas during

regional market boom and also logistical hurdles.

4.4.13 The mega engineering project: the impacts of linguistic diversity

and internal culture (Questions 65, 78)

4.4.13.1 Gold subsidiary responses to the impact of linguistic

diversity and internal culture

Interviewees of the gold company were asked about the impact of cultural diversity of

different contractors on the project.

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Interviewee 2 stated that the project culture within the organization during the product

development stage was a very important factor for project success. The company

project team had worked closely with different international leading companies in the

mining field that had different languages and cultures. However, communication had

only taken place with regards to the contract and international technical standards. He

added that the project did not have an effective management plan particularly for the

remote area at the site preparation phase and construction phase as well. Moreover,

Interviewees 1, 2 and 4 stated that the internal project team had faced language barriers

when working with Asian companies since the Asian companies had not

acknowledged the international technical standards and instead had used their own

internal technical standards. According to Interviewee 4 Asian companies had also

difficulties with the English language. Interviewee 6 added that the project had not

specified how communication would take place within the departments and with the

contractors.

Responses clearly indicated that the language difficulties had not been planned for

(even though the contract had stated English language would be the language of

communication) and this had led to lack of consistency in the use of technical standards

especially during the prefeasibility and feasibility phases and then in the construction

phase.

4.4.13.2 Aluminium subsidiary responses to the impact of linguistic

diversity linguistic divers and internal culture

The aluminum company interviewees were asked about the impact of cultural diversity

of different contractors on the project.

Interviewee 8 stated that the cultural factors (e.g. language, communication) had

impacted on the effectiveness of project process due to the diversity of work, the

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multiplicity of companies, contracts, vendors, suppliers, fabricators and project teams

from different companies starting from the prefeasibility phase toward the construction

phase. However due to the existence of sound expertise, there had been no negative

impacts for the planning or the construction apart from a lack of cooperation among

departments and mega-project teams particularly during the construction activities.

The cultural factors impacting on the project implementation, according to all of the

interviewees, was a lack of communication plan to enable effective communication

among the mega-project inter-departmental teams, higher management, contractors

and the internal project teams. This had caused delays.

4.4.13.3 Headquarter’s responses to the impact of linguistic

diversity linguistic divers and internal culture

Higher management indicated that there had been both positive and negative impacts

from the cultural diversity. Interviewee 14 stated that, due to working with companies

from a variety of countries, international standards and contract had been adhered to;

this response is different from that of the aluminum subsidiary. Interviewee 14 added

that the cultural diversity had in fact helped to provide the different expertise required

for the projects although he conceded there had still been a need for more expertise.

Interviewee 15 explained that, although cultural diversity and project facilities at site

location were items in one of the contract clauses that had been negotiated beforehand

with several contractors, negative impacts had been found related in particular to

language barriers.

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4.4.14 Mega engineering projects: impact of leadership: board members,

higher management and the company management (Questions 10,

19, 23, 28, 51,62)

4.4.14.1 Gold subsidiary responses to the impact of leadership on the

project progress

Interviewee 1 from the gold company stated that the organization chart had affected

the project’s progression due to the conflict of responsibilities. Interviewees 2 and 4

stated that the higher management had delayed the evaluation process and final

approval especially in the design phases. In fact, according to Interviewee 3, the project

owner had been the main cause of the project delay. Interviewee 4 explained further

that there had been poor communication between the main contractor and internal

project team at the prefeasibility and feasibility phases and also a lack of understanding

between the higher management and project teams. Five interviewees 1, 2, 3, 4 and 5

agreed that the project had suffered from lack of proper communication from top to

bottom, and government authorities had delayed project licenses. Both interviewees 1

and 4 agreed that the project team had experienced a lack of assigned authority.

Interviewee 5 stated that the project had lacked proper planning and job descriptions

had not been supplied for each member of internal project management team.

It seems that the company had suffered from a lack of effective leadership as shown

by the responses with regard to lack of inter-departmental communication, lack of a

proper organizational matrix designating structure and responsibilities and job

descriptions. The government also had contributed to the delay through slow approval

of licenses.

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4.4.14.2 Aluminium subsidiary responses to the impact of project

leadership on the project progress

When the aluminum company interviewees were asked about the impact of higher

management on the project activities they also mentioned a lack of effective

leadership, lack of inter-departmental communication and lack of government

cooperation.

Interviewees 7, 8 and 9, for example, stated that the lack of cooperation between the

external and internal authorities had impacted on the project progress time and had

caused cost overrun. Interviewee 9 supplied examples – issuing of permits and

licenses. Interviewee 8 stated that specifically, due to the lack of clarity on how

communication was to take place among the stakeholders, the number of meeting

requests had increased and had caused waste of project time. Higher management

according to the project partner, interviewee 12, had also tried to squeeze the contract

conditions, had not defined the project properly, had not considered the construction

time allowance within -+10 of the project time and generally had not planned well or

spent money-wisely. He implied that the leadership needed to have honesty and

integrity.

It is obvious there had been serious hurdles that had negatively impacted on the project

from the leadership side and had led to increased project costs and delays in the project

delivery time.

4.4.14.3 Headquarter’s responses to the impact of project leadership

on the project progress

In line with responses from interviewees from the aluminum subsidiary, interviewee

13 from the headquarters stated that some projects in different subsidiaries had lacked

project definition and job descriptions, and these difficulties had led to expertise

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leaving the company and had caused changes take place in management. Also

substantiating responses from the aluminum subsidiary, interviewee 14 stated that

there had been a lack of communication among the stakeholders due to lack of

compliance with the communication plan, if there was any. Interviewee 13 stated that

imposition of board members’ decisions on the company’s planning and

implementation had affected the project progress.

Responses of headquarters substantiated those of the aluminum subsidiary in that there

had been poor project planning, poor project definition, lack of job descriptions and

lack of an effective communication plan. Due in part to these difficulties, staff with

expertise had left the company, adding to delays.

In conclusion, this analysis shows that many difficulties had been experienced during

the project phases especially at the conception and prefeasibility phases and had

affected the construction activities and these difficulties had led to delays. There was

agreement among headquarters, the gold subsidiary and aluminum subsidiary that

difficulties had included a lack of understanding of the mega-project processes and the

scope at the early stages of the project until the end of the prefeasibility phase,

unstoppable extra costs of the technical and nontechnical scope creep and change

orders, a lack of definition ,understanding and categorizing of stage-gate deliverables

for mining projects, a lack of technical expertise in the mining field, inappropriate

internal project management team roles and responsibilities for the mining field,

absence of value management engineers and mining engineers, poor project definition

and planning, a lack of higher management cooperation and communication, a lack of

cooperation between all of the stakeholders at the design and construction phases,

deficiencies in the design packages, lack of an effective communication plan, lack of

interface plan, difficulties with contract strategy, clauses and traditional procurement

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system, lack of job descriptions, lack of cost estimation accuracy due to the inaccurate

calculation of ore deposit at the concept phase, lack of procurement tracking program

at the construction phase and lack of modern cost estimation program during the

feasibility phase and construction phase. In addition, the selection of project site had

had a direct and indirect impact on all project costs such as contract price, labor cost,

price of materials, transportation, utility price, staff salary and on the final product.

Finally, a lack of consistency in the use of technical standards especially during the

prefeasibility and feasibility had occurred due to language barriers. The next chapter,

Chapter Five, discusses the implications of these results.

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CHAPTER FIVE

5 DISCUSSION

5.1 Introduction

This chapter presents a review of the findings of this study and a discussion of the

findings and their implications. This study was designed to evaluate the project

management processes used in two megaproject in Saudi Arabia in order to devise an

improved management process framework at mega-project preplanning, initiation,

prefeasibility, feasibility and construction phases. The main aim of this research was

to study and evaluate the extent to which stage-gate project management process and

traditional project management process are being applied in development phase of

(mega) projects and seek to develop a structured approach (a hybrid model) applicable

to future mega-project activity efficiencies. Many project management professionals,

practitioners in the field of industry, academia and developers of software engineering

tools have lack the holistic view and understanding of mega-projects project process

starting from preplanning phase; this research study was designed to assess, clarify and

evaluate mega-projects processes especially at the preplanning phase and at the board

members, executive level and even at project management team level. The research

questions are derived from the research literature, but they could come from current

business practice or your initiative hunches (Marshall and Rossman 2014). The

questions this study sought to address were:

1- Is there a relationship between project management process, scope creep, value

management, contractual arrangement, procurement and software programs

generally in terms of speed up project delivery?

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2- Are traditional project management process adequately addressing the key

variables of “scope” as applied to mega-project?

3- Can current stage-gate project management practices and activities be structured

objectively for more efficient realization of mining mega-project briefs?

4- Are any of the constituents of antecedents of stage-gate project management

applied in the medium and small scale companies, albeit under the guise of more

traditional approaches?

5- Can stage-gate project management practices and activities be structured

objectively for a more efficient realization of mega-project briefs?

6- Identify the characteristics of successful mega integrated project for medium

mining operation firm that is rich of natural resource and lack of project

management team.

7- Is there a relationship between size of the mega-project and project delay?

8- Can mega-project shorten to less stage-gate phases in order to save money, time

and effort during the initial stages of the project?

The data collection of this research was collected from mega-project management staff

in the mining construction industry and two case-business studies. The findings from

this study suggested that the mega-project management processes, tools and

techniques in this mining organization delayed the product deliverable schedule during

the preplanning phase, prefeasibility phases and increased project cost through

ongoing scope creep and change order during the design stages and the execution

phase; this finding is supported by the study of (Whyte 2014) of 15 construction

projects where the findings showed that the project deficiencies came from process

and leadership - 43% and 38% respectively, totaling a contribution of 81% to project

deficiency; unknown internal factors and unknown external factors contributed 11%

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and 5% respectively. Somewhat divergent findings from Whyte’s study are noted in

the following discussion.

Cost and time increased beyond schedule during the preplanning, the conception, the

prefeasibility, the feasibility and the construction phases and affected the output of

each stage by using frequent change orders and iterations of activities and tasks starting

with basic design, then detailed design, until the end of the construction phase and

beginning of start-up. Details of the impacts, as stated by the interviewees, and further

possible impacts are now discussed.

5.2 Impacts of Stage-Gate Process on Project Lifecycle

The two mega-projects of this study had faced obstacles with the stage-gate process at

all stages and ineffectiveness of the traditional project management processes in the

early preplanning stage, a lack of defining and understanding of stage-gate deliverables

for mining projects, difficulties implementing the stage-gate process for mineral

project and process, inappropriate linking of the stage-gate process to key stage

deliverables and some disciplines, a lack of higher management cooperation and length

of time of approval process and design assessment approval by higher management

(gate-keeper), a lack of allotted time for the design evaluation stage after receiving

design packages from the designer, a lack of cooperation and communication between

contractors (designer-constructer) and the owner’s project management team. 43% of

aluminum megaproject interviewees, 34% of higher management and 17% of gold

interviewees, had attributed the mega-project hurdles to the stage-gate process.

Karlström and Runeson (2006) found that the stage-gate process enabled coordination

and communication of functions with other development teams and senior

management; however, in our study, the stage-gate process had not yet contributed to

effective coordination among the various teams. This was possibly because of lack of

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understanding of the stage gate process for mining projects but this understanding

could improve (recommendations are made in the following chapter to aid

improvement).

The ineffective use of the stage-gate process and activities is likely to consume project

management team effort, time and budget because of the intensive meetings and

workshops required to reschedule or rework some of the deliverables. At the time of

this study there had been delays in the project management team decision-making and

delays in final approval from higher management (gate-keeper) at each stage resulting

in rescheduling of each stage or phase of activities. Re-evaluation was required of

each phase of the stage-gate process; increased material costs and delays to the project

construction phase resulted. Van Der Weijde (2008) found that project development

phases or process improved cost predictability, enhanced cost effectiveness, better

schedule predictability, faster project delivery, optimised scope, and better operability

and safety performance. The implementation of megaprojects that involved different

organizations may affect project management processes (Fellows and Liu, 2013).

The CEO of the aluminum subsidiary who had had broad experience with

petrochemical projects and stage-gate process in petrochemical mega-projects

emphasized the importance of the stage-gate process and the need to link the stage-

gate process to the right department and team. Both mega-project senior management

and higher management had had broad work experience in the project management

fields in oil, gas and petrochemical but they had found difficulty in applying the stage-

gate process in the mining project; this was possibly due to the different mining

processes and these difficulties had led, as mentioned, to project delay and cost

overrun. Without a clearly defined process, inadequate or incorrect planning and

scheduling are likely to occur because of inaccurate input parameters, inadequate

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techniques being used, inaccurate resources being planned for, incorrect estimation,

tight schedules, and design inadequacies. Other impacts could be required replacement

of equipment due to rework, delay in replacing items, project schedule delay, and

increased cost of equipment and finally extra cost for the whole project. Anglo

American (2009) found that only 12.5% of mega-projects in the mining field actually

deliver on the benefits that were originally anticipated.

Lack of stage-gate process clarity among stakeholders, departments and contractors at

the project development phase and then execution phase could lead to serious risks

such as increased project direct and indirect costs starting from preplanning phase then

it moves to the basic design phase and detailed design through to construction

activities. Aitken and Crawford (2012) found that project development process plays

a crucial role in corporate strategy via the delivery of benefits through project

management to enable long term business growth delivered through the operating

facilities we extract value from today. Unclear stage-gate processes at preplanning and

execution phases may also increase conflict among departments, increase iteration of

activities or rework at each phase, delay contracting and tendering process, decrease

the accuracy of each objective in the prefeasibility and feasibility stage gate stages,

increase the likelihood of change orders, decrease accuracy of cost estimation of every

stage, lead to poor project start-up plan and possible mechanical failure at the end of

the construction phase.

The lack of awareness of mega-project processes starting from the conception phase

may result in absence of standards and technical codes that can hinder the

interdisciplinary communication among stakeholders and lead to extra cost starting

from basic design in the form of iteration or re-design. Another key fact to remember,

unclear stage-gate process may affect escalating costs of materials and push out

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material delivery times due to shortage of construction materials and high demand and

these can, in turn, result in delay of project start-up, escalating the capital cost.

Lack of understanding of stage-gate processes and deliverables may also mislead cost

estimators and cause inadequate cost control starting from the conception and

prefeasibility phases and may affect capital cost of the project; poor cost estimation

reporting may lead to a delay in identifying the cost overrun, thereby reducing the

ability to put in place any remedies.

Before the prefeasibility phase, if the documentation and correct project specification

(both technical and functional) are not ready and delivered on time to facilitate the

ongoing project deployment phase including design tasks and later construction

activities of the mega-project and if the documentation including the specifications is

in conflict with pre-existing documentation or not available in accordance with

schedule requirements, the schedule may slip or remedial works may be required.

Unidentified technical issues for process and plants at the prefeasibility phase could

affect design and result in design rework, extra budget and project delay. Mackenzie

and Cusworth (2007) found that if the project does not align with the expected benefits

or strategic objectives, or it does not provide business confidence at any stage of the

project review cycle, the study may need to return to the start of the phase, or be

returned to the key value-adding phases of concept and pre-feasibility.

Unclear understandings of the stage-gate processes at the project development and

prefeasibility phases due to lack of expertise of the personnel involved may cause

delay of project completion. Al‐Kharashi and Skitmore (2009) found that that the main

cause of delay in Saudi Arabia public projects is the lack of qualified and experienced

personnel. Moreover, with regard to personnel experience, this study found that lack

of technical and project management experience delayed project study at preplanning

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phase and decision maker approvals. Similarly lack of experience delayed a mega

project in India – the launch of the first domestic aircraft carrier in 2013 even though

the preparation for this mega-project had started in 2008 (LaGrone 2015). These

unclear understandings could lead also to a focus only on short term project delivery

rather than on a long term business strategy, additional costs of attracting personnel

and delay in project start-up. The consequence of these delays could be loss of key

technical expertise already hired due to frustrations experienced with the lack of clarity

of the processes.

There was, moreover, a lack of a proper classification schema for the stage-gate

process to classify activities under each phase due to, as previously mentioned, lack of

technical expertise in the mining field. The scarcity of expertise may result in a dilution

of the quality of the labor and associated reduction in labor productivity, unsafe

construction and start-up, and may, ultimately, lead to project failure. During the

annual leave cycle when there is even less expertise, important project functions may

not continue consistently and hence delays to the project schedule could result.

Although the international project management companies had their own expert

personnel who could plan, supervise and implement the mega-projects, the final

decisions in the stage-gate process, classification of the project activities and moving

activities from one phase to another, were in the hands of the owner or the senior

management. As 22% of the gold project interviewees had highlighted, higher

management, ‘gate keeper’ of stage-gate process, had delayed design assessment

approval at the prefeasibility and feasibility phases. Zou et al (2006) identified time

related risks that influence project delivery, which are: excessive approval procedures

in administrative government departments, incomplete approval and other documents,

unsuitable program planning and inadequate program scheduling, design variations,

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variations by the client. Both megaprojects’ interviewees highlighted the delay of

process approval from the higher management; this delay in approvals could have been

due to lack of experience of the higher management in the mining field. This lack of

making a final decision on project development phase; the basic design stage could

lead to delays in transitioning the project to the detailed design stage and in turn result

in delays in project procurements that require a long delivery time, especially long lead

items such as machinery that could cause substantial problems in start-up of the

project; the delay in project schedule, especially the construction activities, may be

further impacted by rising costs of materials, fabricators, purchases, labors, contract

prices, exchange rates; in addition, as mentioned by all the interviewees, there could

be impacts from changes in government regulations (labor and licenses) resulting in

delayed decision-making in the initial stages of the project. Ahmed et al. (2003) found

that the most critical causes that delay USA-Florida projects were permits approval,

decision and approval during project development stage including design, incomplete

documents, change order, changes in drawings, and changes in specifications. Peter

Morris (2011:7) stated ‘It is evident from an extensive amount of research that

management of the front-end definitional stages of projects is of overwhelming

importance to their ultimate outcome yet we have little empirical data to suggest how

best management competencies here should be improved’. sichard Wittig (2013)

found that the current mega mining project practices require an integrated framework

for stage-gate phases through project development to reduce cost and schedule

overrun. The next-generation of stage-gate systems is to accelerate projects and some

leading companies are working on fast track version of stage gate (Cooper, 2014).

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5.3 Impacts of Megaproject Definition at the Preplanning Phase on Project

Lifecycle

There were similarities between the two mega-project case studies of the gold and the

aluminum subsidiaries in the preplanning, planning phases and construction during

the project definition and prefeasibility phases despite the differences in scope

definition, management, project process, planning, and technology used, the project

management teams, sites, contractors. Perhaps the reason behind the similarities is the

common policies of the shareholders or the parent company, which play a key role in

the advanced preplanning for the megaprojects before their delivery to the heads of the

subsidiaries. The parent company projects are subject to the decisions issued by the

Ministry of Petroleum and Minerals, which in turn are subject to the decisions issued

by the Ministry of Economy and Planning after offering investment opportunities to

leading international companies. Before the conception phase, the parent company and

shareholders imposed names of leading international companies on the subsidiaries to

be considered for the conception phase. Politics can interfere with business decisions.

As Flyvbjerg (2005) stated, political, technical, and cognitive reasons can impact on

investment decisions.

The preplanning phase can also have impacts on the progress of the project. A business

partnership occurs either before the conception phase or with the technology provider

before the design process or during the other construction phases. In the case of

partnership before initiating the conception phase, a leading company in the mining

field and the mining subsidiary sign a memorandum of understanding and state how

the expenses are to be shared and prepare a prefeasibility report. In this study it was

found that, after preparing only a few of the reports, the international personnel

withdrew from the project due to commercial rivalry, competition or political issues.

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In this case the megaproject owner lost money and time and had to renew efforts to

proceed by searching for another partner or technology provider. Jordan et al. (1988)

argued that 15% of the time and resources in projects should be spent on front-end

work, whereas Miller and Lessard (2001) suggested up to 35% thus demonstrating

that, in this project, too much time and money had been allocated to the pre-planning

phase. Although cost uncertainty is higher in the early stages, it too is tangible and

manageable (Samset and Volden 2015).

At the preplanning phase of aluminum project, the owner was reliant on the technology

provider who considered other projects around the world at the same time instead of

committing 100% to this one project; the technology provider who had carried out a

project study under the supervision of the owner had needed to recruit local engineers

and to transfer its own professional staff from other projects around the world to new

project sites and this process led to depletion of the proposed budget and time at the

conception phase; leading company professional staff salaries were calculated on a

monthly salary rate not on a unit rate; in addition professional staff needed

accommodation, transportation, as well as stability before embarking on a study of the

project. Furthermore, late arrival of some leading company staff and late engagement

of staff to project activities consumed much of the conception phase time and budget.

This led in turn to delayed project study phase and significantly increased project costs

including materials and equipment while the owner was sourcing another technology

provider. Furthermore, due to the consumption of funds and time at this stage, and to

avoid further expenses, the project owner imposed the previously constructed

prefeasibility report of the former technology provider on a new technology provider

with some minor edits (material prices). The new technology provider’s changes

affected the project lifecycle. The project owner needed to re-assess the financial

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aspects of the project due to the time difference between the time of use of the

prefeasibility study, material prices (i.e. cement and iron), energy prices (i.e. gas and

oil) and changes to the primary contracts with manufacturers (i.e. pipelines and heat

exchangers). Kaming et al. (1997) found that the major factors influencing cost

overrun are: project degree of complexity, material cost increase due to inflation,

inaccurate material estimation.

During the interviews, the owner project management teams in the gold and aluminum

subsidiaries almost unanimously stated they there were misunderstandings with regard

to mega-project definitions, concepts, processes and they lacked of defining the

meaning of mega-project at the pre-evaluation phase and prefeasibility phase, although

both the owner that represents the business and non-function side and the main leading

project management contractors represents technical side yet mega-project process

still an obstacle to decision-makers in project development phase which often extend

to three years. The reasons for that may go back to different causes as some was

mentioned by interviewees such as a full dependence on the technology provider or

partner, the lack of technical team in mining field, internal project management team

or due to the type of contract (EPCM or EPC), contract terms and condition of

supervision and control. Thus it is clear from these findings that there was insufficient

pre-planning carried out. Samset and Haavaldsen (1999) suggested that most of the

problems ought to be met early, i.e. in the pre-study phase. These findings are in line

with recent studies which have highlighted the front-end phase of projects including

the project definition, as important for ensuring strategic project success (Merrow,

2011; Morris, 2013). Unlike other mega-projects, the mining mega-project, bank loans

and project financial report before the construction phase were based mainly on the

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accurate calculation of the quantity of the mineral resource and water to extract it

before embarking on project evaluation during the conception phase.

Lack of knowledge and coordination were two main aspects impeding progress of this

study and these findings are in line with the study of Duimering et al. (2006) who

found that communication, coordination, knowledge and problem solving effect on the

project team of new project development tasks and activities structure. They suggested

that ‘decomposition of project tasks to minimize interdependence between tasks and

the flexible adaptation of new product development task structures as new forms of

task interdependence are recognized during the development process’ (p. 239).

The two subsidiaries had used the traditional project management process as a mega-

project process except in the design phase which had used the stage-gate process, while

the leading project management firm, and construction companies had used the stage-

gate process, and the pre-study phase had been ignored. Morris (1997) found, too, that

project management had an extremely narrow focus, reflected only in the project life

cycle, and ignored pre-project analysis and evaluation. He noted that as long as we

only focus on the life cycle itself, we are missing the critical early planning stage and

institutional elements that more accurately typify the responsibilities of the project

owner and the project manager. For instance, Morris and Jamieson (2005) study found

that in the study phase, project process, practice and people need to be involved in

moving ideas to practice at the preplanning phase. Morris and Jamieson stated that

when a project’s strategic success is low, the problem possibly lies in the early phases

of the project and in the owner perspective. Edkins, Geraldi, Morris and Smith’s (2013)

study also concluded that, given the significance of pre-project planning, analysis and

evaluation, anything which makes its management more effective should be

considered important.

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5.4 Impacts of Scope of Work and Scope Creep

In this study of the two mega-projects it was found that there were many technical and

non-technical difficulties causing scope creep and change orders; these included poor

quality project definition, lack of data accuracy concerning ore quantity and quality at

the pre-project phase and conception phases, lack of accurate calculation of ore quality

and quantity, owner intervention in decision making, lack of mining expertise and

mining engineers, lack of an internal project management team, inappropriate contract

strategy, inappropriate contract award mechanism, lengthy traditional procurement

system, imposition of unqualified contractors and subcontractors on the company by

the owner, lack of knowledge of local market of mining contractors, subcontractors

and fabricators (design, construction, logistics and procurement). The director of

mega-project execution in the gold company stated that the major cause of scope creep

or scope change had been the owner. Interviewee 10, the representative of the owner

in the department of finance for the aluminum project, also stated that the owner had

caused the project scope creep many times from the beginning of the project and at the

construction phase in order to increase the project capacity. Assaf, Al-Hejji (2005)

found likewise that project owners in Saudi projects and project planning were the

major cause of large project delays. Narayan (2010) found similarly that, with each

scope-change, precious project resources were diverted to activities that had not been

identified in the original project scope, leading to pressure on the project schedule and

budget. Also like the Narayan study, the higher management interviewees stated that

type of contract, clauses, insurance, agreement, market change, project team,

contractor, insurance, governor law, attribution rule, location, weather and quality of

technology at the conception and prefeasibility phases had all contributed to mega-

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project delay and the scope creep. Similar to the Singh study (2010) a faulty contract

management system was the major reason for project delay and cost overrun.

The lack of experience of the project management firm ‘contractor’ led to poor data

gathering, a poor communication plan and ambiguity of mega-project processes which

in turn led to lack of understanding between all the stakeholders and inter-disciplines

and poor documentation, poor project definition, poor scope of work, poor project

design in pre-project phase, poor risk management registry, and then possibly to

inappropriate allocation of resources and activities. According to Johnsinit (2010),

‘megaproject management needs experience, expertise and exposure (p. 1). Cerpa and

Verner (2009) found that project complexity was defined in terms of the different

interests of the stakeholders and the reasons for delays were the long communication

chain and slow feedback.

The lack of knowledge of the local market led also to incomplete cost estimation in

the work breakdown structure, and then to inaccurate design information of the basic

design that in turn had led to inaccurate detailed design; as a consequence there had to

be rework of project activities starting from the basic design, through to the detailed

design stage to the construction phases. In the case of the EPCM contract the situation

became more complicated due to lack of internal project management team, lack of

owner project control and monitoring.

In fact there were schedule delays at the two design phases and construction phase as

well as the pre-project phase (study phase). Thus there were budget blow-outs at

different phases of the project. Therefore, scope impact on the project cost and time,

and when any scope of change occurs leads to inability to meet the original budget and

schedule.

185

Both subsidiaries’ interviewees stated that the procurement contract of the traditional

procurement system had caused project delays and had impacted on the course, events

and scope of the project. Singh (2009) found, too, that inadequate procurement was

considered to be a major reason for project delay and cost overrun.

5.5 Impacts of Contracting and Tendering

The interviewees result shows that the two mega-projects for the gold and the

aluminum subsidiaries had faced technical hitches with both types of contracts, the

EPCM contract and the EPC contract but more with the EPCM. While the cost of EPC

contracts is higher than EPCM, EPC project time is shorter than EPCM and contractor

incurs most of project risk (Lampel, 2001). Both subsidiaries agreed that the traditional

procurement system had not been effective. Moreover the gold and aluminum

subsidiaries agreed that the contract conditions and terms had not been adequate, or as

effective as required. Both subsidiaries placed part of the blame for contract glitches

on the owner’s choice of contractors, the ore data gatherer to pre-project designer, the

project manager, then the project designer and finally the project constructor and

subcontractors. Higher management interviewees of the company headquarters stated

that the type of contract (EPC) clauses, insurance, and agreement had affected the

project completion. Aluminum mega-project partner and planner explained that the

EPC contract agreement and clauses had not considered some conditions for

mechanical completion stage and operation and had affected the project start-up phase.

He added that the project owner had inserted a series of difficult contract conditions

during the contractor’s invitation to bid; these included squeezing contract time,

budget, schedule, and unrealistic construction and delivery time. Loots and Henchie

(2007) study the risk issues related to EPC and EPCM type of contracts and found that

in order to seek competitive tendering, the level of bid and tender packages conditions

186

present by project owner must not neither be too general not too detailed. In the EPCM

contract, the owner, Sink (2009) found that the owner can reduce the high cost

associated with EPC option although he may incur complicated contractual

relationships and possible delays in the schedule. Sink (2009) found, too, that the EPC

contract usually uses a fixed price method whereas the EPCM uses the cost

reimbursable method. Galloway (2009) stated that different types of contract require

different ways to manage them. Berends (2007) stated that the cost reimbursable type

of contract is being used by the owners of oil and gas mega-projects for project

development phase.

For the aluminum mega-project, the main contractor or ‘technology provider’

withdrew after the completion of the mega-project project development phase

‘preplanning phase’ and this led to additional time, cost and efforts after they shared

the expenses; the owner in addition needed to look for another technology provider to

join the project and reevaluate the pre-project stage and prepare a new prefeasibility

report. Furthermore, due to the consumption of money and time in this stage and to

avoid further expenses, the project owner imposed the previous prefeasibility report

on the nominated new partner or technology provider with some minor edits for market

and material evaluation and this may have affected the project lifecycle due to late

engagement of a new technology provider.

The impact of length of contract bidding process may lead, in addition, to delaying

invitation to contractors and tenderers at either the initiation phase, the design phase,

procurement stage, and construction phase and may in turn lead to delay time of

contracting award, and may lead contractors to accepting unrealistic contract

conditions with little negotiation when there is increasing market competition, and this

could lead to the designer ‘contractor’ speeding up the design and evaluation process

187

to submit the design packages during the time frame in order to avoid contract penalty.

This may lead to mega-project design deficiency and rework of some parts of the

design which could take time and it may again lead to project delay and project over

cost at the basic design stage and then in the detailed design stage and finally in the

construction phase when deficiencies have not been corrected at the basic engineering

design. These findings are in line with the study of Singh (2010) who found that delay

and cost overrun could be inherent in terms of poor contractor selection and unethical

behavior, contract bid amount, difference between the winning bid and second bid,

difference between the winning bid and the engineer’s estimate.

Contract award selection based on low price is often unsuccessful especially for the

EPCM type of contract since this type of contract needs a large owner project

management team in every single department in order to follow up project activities

with the nominated leading contractor; otherwise the contractor will handle all the

project activities (project management-design-construction) out with the control of the

owner’s project management team. Poor selection of contractors due to low bids, with

no technical capability to handle the project will lead to cost overruns, schedule delays,

poor quality, and a final result that is not acceptable (PMI 2013). Loots and Henchie

(2007) found, as in this study, that the owner needed to have a large and experienced

in-house team to assist the EPCM contractor as the EPCM contractor could not take

full responsibility for completing the project on time and within budget; Loots and

Henchie suggested that the EPCM contractor should involve the owner in the making

the major decisions thought the project.

The aluminum project director stated that the traditional procurement contract system

was not effective due to the conflict of interests and relationships that had affected the

final decision-making. The traditional project procurement management including

188

contract management had caused project delays and had impacted on the course,

events and scope of the project. The procurement process started after finalizing work

break down structure WBS, and determined the mega-project deliverables and

suppliers. The impacts could be unrealistic time of item delivery and unclear

description of items; unqualified contractor/suppliers may also affect mega-project

cost estimation, time, and schedule. Singh (2010) found, too, that an inappropriate and

inadequate procurement and faulty contractual management system can cause cost

overrun and project delay. Yeo and Ning (2002) found that effective management for

procurement system improves the overall performance of the project, especially the

project schedule and cost.

The impact of delay of mechanical completion and mega-project start-up occurred in

the aluminum project due to the of EPC type of contract in which the clauses and

conditions had not considered the risk of failure at the start-up, resulting in delays due

to mechanical failure.

In addition acceptance by the contractor of unrealistic contract terms and conditions

stated by the owner such as tight deadlines may lead to failure to meet the deadlines.

Furthermore, lack of local market knowledge of contractor or consultant (data or ore

collector, cost estimators, designer, project manager, and constructor) could lead to

consumption of more than anticipated time, effort and funds.

5.6 Impacts of Design

The mega-project design phase starts at the pre-project study or early project planning,

not at the basic engineering design in the prefeasibility phase and detailed engineering

design in the feasibility phase or project lifecycle process. The length and completion

of design phases in the prefeasibility and feasibility phases of the mega projects were

considered as a barrier that caused change orders and delayed project schedule. The

189

difficulties that faced the two mega-projects of the gold and aluminum subsidiaries

during the design phases were delay in receiving design packages from the designer

which, when ready, had been found to be inadequate, and a lack of contribution from

owner’s design team and owner’s value engineering team during the design evaluation

process. The gold company results show, moreover, that there had been a delay caused

by the higher management in assessing and approving the design assessment (stage-

gate process and gate-keeper), poor planning of design bidding and unrealistic

conditions placed by the higher management. The aluminum company results show,

too, that the operation and maintenance teams had not participated in the design

workshops at the preplanning, prefeasibility and feasibility phases. Likewise, Olatunji

(2010) found that design coordination, quality of management during design and

quality of management during construction impact project delivery time performance.

Morris (1997) found that project management had an extremely narrow focus,

reflected only in the project life cycle, and ignored the early project planning of design.

The impact of delay design packages, and lack of contribution of owner’s design team

in the design evaluation of the project design and construction supports the findings

from interviews conducted by Merrow (2011). Moreover, Youker (1999) found that

most projects had design faults at all levels, and no project was without faults.

Galloway (2009) found that changing the scope of work during the design stage led to

different effects from changes in the construction stage. This study also found that the

effects differed between the design and construction stages.

The impacts of pre-planning design transferred to basic engineering and at this stage

either the design deficiencies were discovered and re-designed at the expense of time

or the design deficiencies were transferred to the next phase, the construction phase,

and then the project team discovered the deficiencies late in the project and lost time

190

and money due to repletion of the design deficiency from the basic design. Bordat et

al. (2004) cited causes of design errors in most projects to be similar to those found in

this study - inadequate field investigation, error in design and specifications, planning

errors and design changes.

The design deficiencies started from ore deposit calculation at the pre-planning phase

(study phase) and the miscalculations of ore quality and quantity affected the mega-

project cost estimation report and resulted in deficiency at basic the engineering design

in the prefeasibility phase; the designer and the value management consultant and

internal project team failed to find deficiencies; thus the problems moved to detailed

engineering design and from there to construction phase and led to project failure. If

the three teams had found the deficiencies at the basic design phase then additional

project time and cost may not have occurred.

Furthermore, the two mega-project had lack of technical team and technology provider

did most of design phases at offshore offices, however at design evaluation stage

divided into three levels and at the end of each level the three teams of megaproject

(owner, designer and VE consultant) come together to evaluate the HAZOP, yet the

design phase reiterated in different occasions and delayed the projects. The impact of

certified technical experience in design evaluation, value engineering may contributed

to mega-project delay and cost overrun. In addition, implementing project design

offshore project design activities including engineering concept, basic design and

detailed design, away from owner project management team control including the

maintenance and operation teams may resulted in design deficiencies, many change

orders, project delay and cost overrun.

191

5.7 Impacts of Software Programs on Project at Preplanning and Conception

Phases

Both mega mining projects entirely depended on consulting mining companies to

calculate the quantity and quality of mineral raw materials in the preplanning phase

and before the design phases and that had resulted in inaccurate financial reporting,

inaccurate cost estimation, design iteration, extra costs for each stage-gate process, and

delay in project stages, and also delay in the implementation construction phase.

Having full dependency on leading companies to calculate and analyse ore quantity at

the preplanning phase and conception phase without a control plan led to poor project

cost estimation, and resulted in project delay and difficulties at the design and

construction phases. Both mega-projects used a traditional tool to estimate the project

cost during the preplanning phase, prefeasibility phase and construction phase, and this

use had resulted in several calculation errors appearing clearly after the basic design,

detailed design and before and during construction phases for both projects. Moreover,

both subsidiaries entirely depended on the main contractor to list and track project

procurements during prefeasibility, feasibility and construction phases, and this had

resulted in delay of some equipment delivery during the construction phase.

The calculations for this mega project study were inaccurate and affected all phases of

the project. Quan, JianHong and Haiyang (2010) study also showed that accurate

calculations are vital at the pre-planning stage. They suggested software for data

gathering be used at the preplanning phase to find ore quantity and size of open pit

including pit design, production and operational management leading to a report

encompassing mine resource conditions, mining technical conditions, mineral sales

prices, ore mining and processing costs for maximizing the economic benefit.

Radulescu and Radulescu (2012) found that the mining companies, even large ones,

192

are investing little in the computerization of the mining activity and one way of

increasing profitability would be through widespread computerization of the activity.

Azhar et al. (2008) found that in engineering and construction projects inadequate site

investigations can increase cost overruns.

5.8 Alignment of Research Objectives with Findings

The following table aligns the research objectives with the problems and findings.

Table 5.1: Align objectives with the findings

193

Problem Need Key literature

variables

(cross-ref of

own sub-

chapter) – Ch2

Interview

questions – Ch4

Research

objectives –

Ch3

Methodology -

Ch3

Results and

Findings - Ch4

Research

Questions - Ch5

The key

findings Ch7

Conclusion

Deliverable

Recommendation explicit

section

-Mega-Project cost

overrun, delay of time

during the preplanning

phase, construction

phase, and start-up phase.

Moreover mega-project

quality issues for small

and medium companies

that intend to build high

quality mega-projects.

-Many project

management

professionals,

practitioners in the field

of industry, academia

and developers of

software engineering

tools have lack the

holistic view and

understanding of mega-

projects project process

starting from preplanning

phase.

-To assess,

clarify and

evaluate mega-

projects

processes

especially at the

preplanning

phase and at the

board members,

executive level

and even at

project

management

team level.

-Practical

rationalities and

practices of the

(mega) project

delivery during

project lifecycle

starting from

preplanning

phase till the

delivery phase.

Ch2

Section 4.2

Interviewee

question and

response.

0. To better

mega-project

engineering-

management

processes

through

analysis of a

pre-planning

phase

evaluation for

construction/m

ining

endeavours.

This particular

research was

designed to

evaluate the

project

management

processes used

in two mega-

projects in

Saudi Arabia

in order to

devise an

improved

project

management

process

framework for

the mega-

project

preplanning,

initiation,

prefeasibility,

feasibility, and

construction,

delivery and

start-up

phases.

Qualitative-

semi structure

face to face

interview.

Many difficulties

had been

experienced during

the project phases

especially at the

conception and

prefeasibility

phases and had

affected the

construction

activities and these

difficulties had led

to delays. There

was agreement

among

headquarters, the

gold subsidiary and

aluminium

subsidiary that

difficulties had

included a lack of

understanding of

the mega-project

processes and the

scope at the early

stages of the project

until the end of the

prefeasibility phase,

unstoppable extra

costs of the

technical and

nontechnical scope

creep and change

orders, a lack of

definition

,understanding and

categorizing of

stage-gate

deliverables for

mining projects, a

lack of technical

expertise in the

mining field,

inappropriate

internal project

management team

roles and

responsibilities for

the mining field,

absence of value

management

engineers and

mining engineers,

poor project

definition and

1- Is there a

relationship

between project

management

process, scope

creep, value

management,

contractual

arrangement,

procurement and

software

programs

generally in terms

of speed up

project delivery?

2- Are traditional

project

management

process

adequately

addressing the

key variables of

“scope” as

applied to mega-

project?

3- Can current

stage-gate project

management

practices and

activities be

structured

objectively for

more efficient

realization of

mining mega-

project briefs?

4- Are any of the

constituents of

antecedents of

stage-gate project

management

applied in the

medium and small

scale companies,

albeit under the

guise of more

traditional

approaches?

5- Can stage-gate

project

management

1- Lack of

mining expertise

and knowledge

and lack of

coordination of

project

management

teams

particularly at

the preplanning

phase affected

the outcomes of

the mega-

projects, e.g.

mechanical

failures. It was

also found that

shareholders

had imposed the

hiring of the

main

contracting

companies even

though they

lacked local

market

knowledge.

Moreover the

project lifecycle

process was

hindered by

inaccurate

calculations of

the quantity and

quality of the

mineral

resources at the

preplanning

phase.

2- Mega-project

scope change

and change

orders

contributed to

project delay

and occurred for

many reasons:

inaccurate data

collection for

mineral

resources;

traditional

procurement

system which

Cost and time

increased beyond

schedule during the

preplanning, the

conception, the

prefeasibility, the

feasibility and the

construction phases

and affected the

output of each stage

by using frequent

change orders and

iterations of

activities and tasks

starting with basic

design, then

detailed design,

until the end of the

construction phase

and beginning of

start-up. Details of

the impacts, as

stated by the

interviewees, and

further possible

impacts are found

in the following

sections.

In order to overcome many

of the highlighted

difficulties, the outcome of

this research study was the

development of a mega-

project road map and hybrid

process for future

preplanning phases

Figure 6.9: Roadmap for

Mega project development

process (Preplanning phase).

It includes Mega-project

preplanning activities and

tasks.

-Project process, practice

and people need to be

involved in moving ideas to

practice at the preplanning

phase

194

planning, a lack of

higher management

cooperation and

communication, a

lack of cooperation

between all of the

stakeholders at the

design and

construction phases,

deficiencies in the

design packages,

lack of an effective

communication

plan, lack of

interface plan,

difficulties with

contract strategy,

clauses and

traditional

procurement

system, lack of job

descriptions, lack of

cost estimation

accuracy due to the

inaccurate

calculation of ore

deposit at the

concept phase, lack

of procurement

tracking program at

the construction

phase and lack of

modern cost

estimation program

during the

feasibility phase

and construction

phase. In addition,

the selection of

project site had had

a direct and indirect

impact on all

project costs such

as contract price,

labour cost, price of

materials,

transportation,

utility price, staff

salary and on the

final product.

Finally, a lack of

consistency in the

use of technical

standards especially

during the

prefeasibility and

feasibility had

occurred due to

language barriers.

The next chapter,

practices and

activities be

structured

objectively for a

more efficient

realization of

mega-project

briefs?

6- Identify the

characteristics of

successful mega

integrated project

for medium

mining operation

firm that is rich of

natural resource

and lack of

project

management

team.

7- Is there a

relationship

between size of

the mega-project

and project delay?

8- Can mega-

project shorten to

less stage-gate

phases in order to

save money, time

and effort during

the initial stages

of the project?

allowed conflict

of interest in the

evaluation

process;

contracts used

allowed control

by the main

contractors

rather than the

owner; time

lapses between

pre-planning

and execution

meant there

were market

changes; lack of

specialized

technical

personnel in the

project team at

the pre-planning

phase; lack of

cooperation

from

governmental

authorities;

lengthy time to

receive licenses

to manage the

logistics related

to the location;

and lack of

experience of

contractor

personnel (even

though they

were ‘expert’)

with advanced

technology.

3- Lack of a

clearly defined

stage gate

process led to

inaccurate input

parameters;

inadequate

techniques

being used;

inaccurate

resources being

planned for;

incorrect

estimation; tight

or incorrect

schedules and

planning; design

inadequacies;

replacement of

equipment due

195

Chapter Five,

discusses the

implications of

these results.

to rework; delay

in replacing

items; increased

material costs

and delayed

project

construction

phase. Lack of

stage gate

process clarity

among

stakeholders

increased the

project’s direct

and indirect

costs and

increased

iteration of

rework at each

phase starting

from the

preplanning

phase through

the design

phases to

construction

activities and

project start-up.

Lack of

understanding

of the stage-gate

process

increased

conflict among

departments;

delayed the

contracting and

tendering

process;

decreased the

accuracy of

each objective

in the

prefeasibility

and feasibility

phases,

increased the

likelihood of

change orders;

decreased the

accuracy of cost

estimation of

every stage; led

to a poorly

developed

project start-up

plan and

mechanical

failure at the

end of the

196

construction

phase. Unclear

stage-gate

process, i.e. the

data provided,

misled the cost

estimators and

project

execution team

and caused

inadequate cost

control starting

from the

prefeasibility

phase and

increased capital

cost of the

project as extra

loans had to be

applied for; the

poor cost

estimation led to

a delay in

identifying the

cost overrun,

thereby

reducing the

ability to put in

place any

strategies. This

led to technical

issues being

unidentified for

the project

design at the

prefeasibility

phase. This led,

too, to a focus

only on short

term project

delivery rather

than on a long

term business

strategy.

Additional costs

for attracting

personnel were

incurred; late

government

permits and

licenses led to

delays at

different stages

of the project.

All these

reasons led to

delayed project

start-up. Delays

in making final

decisions led to

197

delays in

transitioning the

project to the

next stage and

caused

substantial

problems at the

start-up of the

mega-projects.

4- The

inaccurate pre-

planning phase

of the design

phases led to

serious impacts.

The length and

completion of

the design phase

caused change

orders and

delayed the

project

schedule; in

addition, as the

views of some

stakeholder

teams had not

been considered

during the

design

evaluation

process,

mechanical

failure

eventuated. The

design

deficiencies

began with the

ore deposit

calculation at

the pre-planning

phase and the

miscalculations

of ore quality

and quantity

affected the

mega-project

cost estimation

report and

resulted in

design

deficiencies at

the

prefeasibility

and feasibility

phases as well

as poor start-up.

Implementing

the project

198

design activities

offshore away

from the

owner’s

supervision led

also to design

deficiencies.

These findings

led to delays in

the

implementation

of the mega-

project and

increased mega-

project costs.

Ch2 Sec 2.1, 2.2 -Over-estimation of project benefits and success in positive way by owner/clients and also under-estimating of cost and time strategically at the preplanning phase. -Optimism bias or strategic misrepresentation during the preplanning phase leads to the megaproject cost overrun -Mega-project culture and management, project complexity & design also the daily practice on the level of cooperation between partners Influence design, project outcomes, and project fund

Q5-Q10, Q19, Q23, Q28,Q30 ,Q39,Q44, Q51, Q62 Q58 –Q59 Q65 and Q78

1.Determine the process used in the early stages of the two megaprojects;

Qualitative- semi structure face to face interview.

The aluminium company faced technical and non-technical hurdles when calculating the cost estimation at the conception and construction phases due to the lack of appropriate tools for the cost estimation and due to the reliance on traditional methods and contractors to collect information and to estimate the cost during the conception and construction phases. For the gold company although relying on the expertise of the contractors, it was found that some of the cost estimations at the project early stages had been incorrect. linguistic diversity and internal culture: The cultural factors impacting on the project

As above.

As above.

- The road map may contributes to reduce the impact of time and cost on megaproject output of executives, project managers and planners especially at the preplanning phase which will reflect positively on the overall process , cost and time.

1.Hiring technical leadership 2. Raw material availability 3. Utility & infrastructure availability 4. Project Data collection 5. Production, price, partnership & market forecast 6. Logistics & permits requirement 7. Preliminary process options assessment 8. Hiring operation & support teams. 9. Preliminary assessment idea of alternatives. 10. Potential technology & long lead items. (best contractors for high quality) 11. Evaluate Potential negative & positive impacts 12-Project definition, scope, data & solution 13- Identify opportunity & need 14- Scope of Environment, health & safety

199

and increase mega-project cost overrun. -The project owner is the main source of Project change order which lead to project overrun and schedule delay.

implementation, according to all of the interviewees, was a lack of communication plan to enable effective communication among the mega-project inter-departmental teams, higher management, contractors and the internal project teams. This had caused project delays. Leadership and project progress: Gold: the company had suffered from a lack of effective leadership as shown by the responses with regard to lack of inter-departmental communication, lack of a proper organizational matrix designating structure and responsibilities and job descriptions. The government also had contributed to the delay through slow approval of licenses. Aluminium: serious hurdles that had negatively impacted on the project from the leadership side and had led to increased project costs and delays in the project delivery time. Headquarters:

15- Preliminary business & economic analysis OOM,EVA,IRR 16-Financial study & capital estimation 1 17. Preliminary project stakeholders 18. Value Improvement Practice checklist 1 19. Project critical Key milestones 20- Risk management study 1

200

There had been poor project planning, poor project definition, lack of job descriptions and lack of an effective communication plan. Due in part to these difficulties, staff with expertise had left the company, adding to delays.

Ch2 Sec 2.3 Overlap and gap between the PMBOK and PRINCE2 for planning phase. Both traditional approaches can be seen in small-sized companies /contactors / subcontractors, medium-sized contactors /subcontractors, and some small / medium sized operation companies. Project management strategy needed in order to manage the project activities especially between those who follow the American standard and those who follow the British standard.

Q15,Q39

2.Identify the measures used for the (mega)-projects at the early stages to avoid project life cycle problems and to speed up implementation of project activities without compromising the quality of work and project;


There is a big gap between and both traditional approaches can be seen in small-sized companies/contactors/subcontractors, medium-sized contactors/subcontractors, and some small/medium sized operation companies.

As above.

As above.

-The front-end phase of projects including the project definition, as important for ensuring strategic project. -The lack of awareness of mega-project processes starting from the conception phase may result in absence of standards and technical codes that can hinder the interdisciplinary communication among stakeholders and lead to extra cost starting from basic design in the form of iteration or re-design. -Although the international project management companies had their own expert personnel who could plan, supervise and implement the mega-projects, the final decisions in the process,

Roadmap process may contributes to narrow this gap.

201

classification of the project activities and moving activities from one phase to another, were in the hands of the owner or the senior management. -The preplanning phase can have impacts on the progress of the project. -The parent company and shareholders imposed different names of leading international companies on the subsidiaries to be considered for the conception phase. -Politics can interfere with business decisions. -There were misunderstandings with regard to mega-project definitions, concepts, processes and they lacked of defining the meaning of mega-project at the pre-evaluation phase and prefeasibility phase, although both the owner that represents the business and non-function side and the main leading project management contractors represents technical side yet mega-project process still an obstacle to

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decision-makers in project development phase which often extend to three years. From these findings that there was insufficient pre-planning carried out. Lack of knowledge and coordination were two main aspects impeding progress of this study. The two subsidiaries had used the traditional project management process as a mega-project process except in the design phase which had used the stage-gate process, while the leading project management firm, and construction companies had used the stage-gate process, and the pre-study phase had been ignored.

Ch2 Sec 2.4 Most international leading firms are using traditional Stage-Gate Process or Front end loading process, and trying to move toward a new fast-track generation of

Q9, Q22, Q46-Q47 and Q78

3. Determine the factors impeding the effectiveness of the measures;


Both companies faced obstacles with the stage-gate process for the mining field: shortage of technical Ineffective traditional project management process in the mining mega-project 34%

As above.

-The ineffective use of the stage-gate process and activities is likely to consume project management team effort, time and budget because of the intensive meetings and workshops

The two mega-projects of this study had faced obstacles with the stage-gate process at all stages and ineffectiveness of the traditional project management processes in the early preplanning stage, a lack of defining and understanding of

Roadmap chart. -Stage gate review 1 -Stage gate review 2 -Stage gate review 3 -Stage gate review 4

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Stage-Gate Process, yet there is lack of understanding of the Stage-Gate Process and how it is implemented. Studies show this system can contribute to the success of a project.

Lack of in-house technical mining engineers 33% Lack of project management teams 33% HIGHER MANAGEMENT (BUSINESS UNIT) expertise in the mining field, a lack of internal project management team for the mining field, ineffectiveness of traditional project management processes in the mining mega-projects, unappropriated linking of the stage-gate process to key stage deliverables and some disciplines, absence of value management engineers and mining engineers, delay in design assessment approval decisions, a lack of cooperation among all of the stakeholders, a lack of defining and understanding stage-gate deliverables for mining projects, a lack of cooperation during the design evaluation and approval, a lack of allotted time for design evaluation and finally a lack of cooperation and communication between contractors and the owner project team.

required to reschedule or rework some of the deliverables. -There is a need to link the stage-gate process to the right department and team. -Without a clearly defined process, inadequate or incorrect planning and scheduling are likely to occur because of inaccurate input parameters, inadequate techniques being used, inaccurate resources being planned for, incorrect estimation, tight schedules, and design inadequacies. -Other impacts could be required replacement of equipment due to rework, delay in replacing items, project schedule delay, and increased cost of equipment and finally extra cost for the whole project. -Lack of stage-gate process clarity among stakeholders,

stage-gate deliverables for mining projects, difficulties implementing the stage-gate process for mineral project and process, inappropriate linking of the stage-gate process to key stage deliverables and some disciplines, a lack of higher management cooperation and length of time of approval process and design assessment approval by higher management (gate-keeper), a lack of allotted time for the design evaluation stage after receiving design packages from the designer, a lack of cooperation and communication between contractors (designer-constructer) and the owner’s project management team. The stage-gate process had not yet contributed to effective coordination among the various teams. This was possibly because of lack of understanding of the stage gate process for mining projects but this understanding could improve (recommendations

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departments and contractors at the project development phase and then execution phase could lead to serious risks such as increased project direct and indirect costs starting from preplanning phase then it moves to the basic design phase and detailed design through to construction activities. -The lack of awareness of mega-project processes starting from the conception phase may result in absence of standards and technical codes that can hinder the interdisciplinary communication among stakeholders and lead to extra cost starting from basic design in the form of iteration or re-design. -Lack of understanding of stage-gate processes and deliverables may also mislead cost estimators and

are made in last chapter. The ineffective use of the stage-gate process and activities is likely to consume project management team effort, time and budget because of the intensive meetings and workshops required to reschedule or rework some of the deliverables. Without a clearly defined process, inadequate or incorrect planning and scheduling are likely to occur because of inaccurate input parameters, inadequate techniques being used, inaccurate resources being planned for, incorrect estimation, tight schedules, and design inadequacies. Other impacts could be required replacement of equipment due to rework, delay in replacing items, project schedule delay, and increased cost of equipment and finally extra cost for the whole project. Lack of stage-gate process clarity among stakeholders, departments and contractors at the project

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cause inadequate cost control starting from the conception and prefeasibility phases and may affect capital cost of the project; poor cost estimation reporting may lead to a delay in identifying the cost overrun, thereby reducing the ability to put in place any remedies. -Unclear understandings of the stage-gate processes at the project development and prefeasibility phases due to lack of expertise of the personnel involved may cause delay of project completion. -Lack of a proper classification schema for the stage-gate process to classify activities under each phase due to lack of technical expertise in the technical field.

development phase and then execution phase could lead to serious risks such as increased project direct and indirect costs starting from preplanning phase then it moves to the basic design phase and detailed design through to construction activities. Unclear stage-gate processes at preplanning and execution phases may also increase conflict among departments, increase iteration of activities or rework at each phase, delay contracting and tendering process, decrease the accuracy of each objective in the prefeasibility and feasibility stage gate stages, increase the likelihood of change orders, decrease accuracy of cost estimation of every stage, lead to poor project start-up plan and possible mechanical failure at the end of the construction phase. Unclear stage-gate process may affect escalating costs of materials and push out material delivery times due to shortage of construction materials and high

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demand and these can, in turn, result in delay of project start-up, escalating the capital cost. Lack of understanding of stage-gate processes and deliverables may also mislead cost estimators and cause inadequate cost control starting from the conception and prefeasibility phases and may affect capital cost of the project; poor cost estimation reporting may lead to a delay in identifying the cost overrun, thereby reducing the ability to put in place any remedies. Unidentified technical issues for process and plants at the prefeasibility phase could affect design and result in design rework, extra budget and project delay. Unclear understandings of the stage-gate processes at the project development and prefeasibility phases due to lack of expertise of the personnel involved may cause delay of project completion. Unclear understandings could lead also to a focus only on short

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term project delivery rather than on a long term business strategy, additional costs of attracting personnel and delay in project start-up. A lack of a proper classification schema for the stage-gate process to classify activities under each phase due to, as previously mentioned, lack of technical expertise in the mining field. lack of making a final decision on project development phase; the basic design stage could lead to delays in transitioning the project to the detailed design stage and in turn result in delays in project procurements that require a long delivery time, especially long lead items such as machinery that could cause substantial problems in start-up of the project; the delay in project schedule, especially the construction activities, may be further impacted by rising costs of materials, fabricators, purchases, labours, contract prices, exchange rates; in addition, as

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mentioned by all the interviewees, there could be impacts from changes in government regulations (labour and licenses) resulting in delayed decision-making in the initial stages of the project.

Ch2 Sec 2.5 Scope change is still a major issue in engineering project management, especially when there is no scope change control in the project. Any poor preparation for project scope during the mega-project preplanning phase may lead to scope creep that could cause cost overrun.

Q16-Q19 Q21 and Q72-Q78 Q3, Q4, and Q12-Q13 and Q24

4. Determine the personnel’s knowledge in relation to technical tasks; 5. Ascertain the adequacy of training in the process used; 6. Determine how scope of work, scope change and scope creep were mitigated;


Both companies had faced technical and nontechnical hitches with the project scope of work and project change orders caused by: inappropriate contract strategy, contract award mechanism, imposition of unqualified contractors on the company by the owner (the government and higher management) especially the main contractor and some of subcontractors, owner intervention in decision making, lack of data accuracy at the conception phase, lack of mining expertise, lack of internal project management team, lack of mining engineers, poor quality project definition and poor project planning and lack of local mining contractors.

As Above.

There were many technical and non-technical difficulties causing scope creep and change orders; these included poor quality project definition, lack of data accuracy concerning ore quantity and quality at the pre-project phase and conception phases, lack of accurate calculation of ore quality and quantity, owner intervention in decision making, lack of mining expertise and mining engineers, lack of an internal project management team, inappropriate contract strategy, inappropriate contract award mechanism,

There were schedule delays at the two design phases for both companies and construction phases as well as the pre-project phase (study phase). Thus there were budget blow-outs at different phases of the project. Therefore, scope impact on the project cost and time, and when any scope of change occurs leads to inability to meet the original budget and schedule.

Roadmap chart 12- Project definition, scope, data & solution 14- Scope of Environment, health & safety 39- Update project scope

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lengthy traditional procurement system, imposition of unqualified contractors and subcontractors on the company by the owner, lack of knowledge of local market of mining contractors, subcontractors and fabricators (design, construction, logistics and procurement). -type of contract, clauses, insurance, agreement, market change, project team, contractor, insurance, governor law, attribution rule, location, weather and quality of technology at the conception and prefeasibility phases had all contributed to mega-project delay and the scope creep. -The lack of experience of the project management firm ‘contractor’ led to poor data gathering, a poor communication plan and ambiguity of

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mega-project processes which in turn led to lack of understanding between all the stakeholders and inter-disciplines and poor documentation, poor project definition, poor scope of work, poor project design in pre-project phase, poor risk management registry, and then possibly to inappropriate allocation of resources and activities. -The lack of knowledge of the local market led also to incomplete cost estimation in the work breakdown structure, and then to inaccurate design information of the basic design that in turn had led to inaccurate detailed design; as a consequence there had to be rework of project activities starting from the basic design, through to the detailed design stage to the construction phases.

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Ch2 Sec 2.6 Megaproject delay and cost overrun had a relationship with the scope of work, scope change and the contract strategy, bidding process and procurement system. Importance of contract strategy for scope of work and success of the project starting from the preplanning phase of the project lifecycle. Contract, cost estimation based on the scope of work and work breakdown structure must be considered carefully at the preplanning phase.

Q20, Q45-Q56 Q8 and Q45 –Q56 Q38-Q68 Q2, Q38-Q67 and Q68 Q48-Q54

7. Determine the type and effectiveness of the megaprojects’ contracts; 8. Determine the internal and external factors affecting the effectiveness of the megaprojects’ contracts; 9. Establish the evaluation techniques used on the megaprojects 10. Determine the internal and external factors affecting the effectiveness of the evaluation techniques; 11. Establish how risk was assessed and monitored during the pre-planning and construction phases;


Both companies had faced difficulties with the contract strategy and clauses. Both the gold and the aluminium companies faced technical hitches with both types of contracts either EPCM or the EPC, but more with the EPCM. Both companies agreed that the traditional procurement system had not been effective. Moreover the gold and aluminium companies agreed that the contract conditions and terms had not been adequate, or as effective as required. Both companies placed part of the blame for contract problems on the owner. Market condition and external factors: interviewees, of both companies highlighted uncertainty of market, uncertainty of government cooperation, uncertainty of the labour law and possibility of changing at any time, imposing unqualified contractors on the projects during the conception phase, design and construction, preoccupation of

As Above.

-The two mega-projects had faced technical hitches with both types of contracts, the EPCM contract and the EPC contract but more with the EPCM. -The traditional procurement system for both projects had not been effective. -The contract conditions and terms had not been adequate, or as effective as required for the gold project. -Both subsidiaries placed part of the blame for contract glitches on the owner’s choice of contractors, the ore data gatherer to pre-project designer, the project manager, then the project designer and finally the project constructor and subcontractors. -The type of contract (EPC) clauses, insurance, and agreement had affected the project completion.

Both type of contract whether EPC and EPCM have advantages and disadvantage. However contract type and clauses must discussed carefully.

Roadmap chart: 4- Project Data; Geology & mining Data 6- Logistics & permits requirement 8- Hiring operation & support teams 10- Potential technology & long lead items 14- Scope of Environment, health & safety 15- Preliminary business & economic analysis OOM,EVA,IRR 16- Financial study & capital estimation 1 17- Preliminary project stakeholders 18- Value Improvement Practice checklist 1 20. Risk management study 1 22- Project Flow Diagram 23- Financial study & capital estimation 2 24. risk management study 2 25- Conceptual engineering package developed 26- Applicable Value improvement practice 29- Best solution for engineering details 30- Megaproject specification 31- Logistics & procurement 32- Total constructability or buildability review

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top companies in field of manufacturing, project management and mining with other project in the region due to local and regional market boom. The main external factors related to the market that had affected the project had been the government regulations and a lack of proper cooperation (e.g. delays in providing licenses), bank loans, product marketing (geographical area, customer type), lacked of construction contractor at the market boom, lacked of marketing experience to sell the products, lacked of expertise in the mining fields. Location and logistics: There had been delays in government delivery of project licenses during the early stages of the project, lack of government cooperation, lack of governmental authorities’ cooperation, lack of management interface plan, poor communication between the

-The EPC contract agreement and clauses had not considered some conditions for mechanical completion stage and operation and had affected the project 156 Start-up phase. -The project owner had inserted a series of difficult contract conditions during the contractor’s invitation to bid; these included squeezing contract time, budget, schedule, and unrealistic construction and delivery time. -The impact of length of contract bidding process may lead, in addition, to delaying invitation to contractors and tenderers at either the initiation phase, the design phase, procurement stage, and construction phase and may in turn lead to delay time of contracting award, and may

33- Operability & maintainability 34-Develop basic engineering package 35- Complete business & economic analysis EVA,IRR 36. Risk management study 3 37- Value Improvement Practice checklist 2 38- Financial study & capital estimation 3 41- Collecting information for construction phase 42- Collecting information for operation & maintenance 43- Completing detailed engineering 45. Risk management study 4

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company, authorities and local community around the project site, and logistical difficulties such as transportation to/from the remote area.

lead contractors to accepting unrealistic contract conditions with little negotiation when there is increasing market competition, and this could lead to the designer ‘contractor’ speeding up the design and evaluation process to submit the design packages during the time frame in order to avoid contract penalty. This may lead to mega-project design deficiency and rework of some parts of the design which could take time and it may again lead to project delay and project over cost at the basic design stage and then in the detailed design stage and finally in the construction phase when deficiencies have not been corrected at the basic engineering design. -Contract award selection based on low price is often

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unsuccessful especially for the EPCM type of contract since this type of contract needs a large owner project management team in every single department in order to follow up project activities with the nominated leading contractor; otherwise the contractor will handle all the project activities (project management-design-construction) out with the control of the owner’s project management team. -The impact of delay of mechanical completion and mega-project start-up occurred in the aluminium project due to the of EPC type of contract in which the clauses and conditions had not considered the risk of failure at the start-up, resulting in delays due to mechanical failure.

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-acceptance by the contractor of unrealistic contract terms and conditions stated by the owner such as tight deadlines may lead to failure to meet the deadlines. -Lack of local market knowledge of contractor or consultant (data or ore collector, cost estimators, designer, project manager, and constructor) could lead to consumption of more than anticipated time, effort and funds.

Ch2 sec 2.1, 2.2, 2.3

Q30-Q42 Q14,Q69-Q77 Q11,Q14, Q28 and Q69-Q77

12. Establish to what extent technology and software were used and how effective they were in all the lifecycle stages; 13. Evaluate the performance of the design teams from pre-planning through to feasibility stages; 14. Determine the factors affecting the performance of the design


Design issues: Both the gold and the aluminium companies agreed that there had been a lack of contribution from an internal design team and value engineering team, and delay in receiving design packages which, when ready, had been found to be inadequate. The gold company results show, moreover, that there had been a delay caused by the higher management in assessing and approving the

As Above.

Design: The length and completion of design phases in the prefeasibility and feasibility phases of the mega projects were considered as a barrier that caused change orders and delayed project schedule. The difficulties that faced the two mega-projects of the gold and aluminium subsidiaries during the design phases

Two phases of design process are the success key of any project and must considered carefully. -Software program is the first step to calculate the raw data for any mining project.

Roadmap chart: 4- Project Data collection 5-Production, price, partnership & market forecast 29- Best solution for engineering details 30- Megaproject specification 31- Total constructability or buildability review 32- Operability & maintainability 33- Develop basic engineering package 34- Value Improvement Practice checklist 2

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Q69-Q84 Q80-Q84 Design phase, project team, technology software and value management issues.

teams from pre-planning through to feasibility stages; 15. Determine the function analysis techniques used 16. Establish which factors impeded the effectiveness of the function analysis.

design assessment, poor design bidding planning and unrealistic conditions placed by the higher management. The aluminium company results show, too, that the operation and maintenance teams had not participated in the design workshops at the prefeasibility and feasibility phases. Software issues: The corporation did not use accurate software programs to calculate the quantity of mineral raw materials in the concept phase and before the design phase as a result of the high costs possibly also due to the lack of technicians to run such programs. The company did not use a software program to track project procurements during the construction phases for the same reason. The company had used a traditional tool to estimate the project cost during the prefeasibility phase and construction phase such as cost comparison of the previous projects and equipment.

were delay in receiving design packages from the designer which, when ready, had been found to be inadequate, and a lack of contribution from owner’s design team and owner’s value engineering team during the design evaluation process. The gold company results show, moreover, that there had been a delay caused by the higher management in assessing and approving the design assessment (stage-gate process and gate-keeper), poor planning of design bidding and unrealistic conditions placed by the higher management. The aluminium company results show, too, that the operation and maintenance teams had not participated in the design workshops at the preplanning, prefeasibility and feasibility phases.

38- Collecting information for construction phase 39- Collecting information for operation & maintenance 40- Completing detailed engineering 41- Completing financial specification 42- Risk management study 4 43- Value Improvement Practice checklist 3 44- Final Design test or qualification test

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Function analysis: The value engineering workshops had become a hurdle instead of facilitating the project process at the early stages and this had occurred due to a lack of a dedicated value engineering team, a lack of defined the internal project management team roles and responsibilities during the design phase. The gold company engineering team had lacked value management knowledge and experience, and hence the reason for being isolated from the value engineering workshops. For the gold company function analysis had taken place, there had still been inaccurate information passed to the internal project management department. Both the gold and aluminium subsidiaries used similar traditional techniques to analysis project functions and they depend heavily on the contractor and consultant to analysis the project functions. Project team:

The impact of delay design packages, and lack of contribution of owner’s design team in the design evaluation of the project design and construction. This study also found that the effects differed between the design and construction stages. The impacts of pre-planning design transferred to basic engineering and at this stage either the design deficiencies were discovered and re-designed at the expense of time or the design deficiencies were transferred to the next phase, the construction phase, and then the project team discovered the deficiencies late in the project and lost time and money due to repletion of the design deficiency from the basic design. The design deficiencies started from

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Both companies had had internal teams who had insufficient technical and non-technical expertise in the mining field.

ore deposit calculation at the pre-planning phase (study phase) and the miscalculations of ore quality and quantity affected the mega-project cost estimation report and resulted in deficiency at basic the engineering design in the prefeasibility phase; the designer and the value management consultant and internal project team failed to find deficiencies; thus the problems moved to detailed engineering design and from there to construction phase and led to project failure. If the three teams had found the deficiencies at the basic design phase then additional project time and cost may not have occurred. The two mega-project had lack of technical team and technology provider did most of design

219

phases at offshore offices, however at design evaluation stage divided into three levels and at the end of each level the three teams of megaproject (owner, designer and VE consultant) come together to evaluate the HAZOP, yet the design phase reiterated in different occasions and delayed the projects. The impact of certified technical experience in design evaluation, value engineering may contributed to mega-project delay and cost overrun. Implementing project design offshore project design activities including engineering concept, basic design and detailed design, away from owner project management team control including the maintenance and operation teams may resulted in design

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deficiencies, many change orders, project delay and cost overrun. Software: Both mega mining projects entirely depended on consulting mining companies to calculate the quantity and quality of mineral raw materials in the preplanning phase and before the design phases and that had resulted in inaccurate financial reporting, inaccurate cost estimation, design iteration, extra costs for each stage-gate process, and delay in project stages, and delay in the implementation construction phase. Having full dependency on leading companies to calculate and analyse ore quantity at the preplanning phase and conception phase without a control plan led to poor project cost estimation, and resulted in project delay and difficulties at the design

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and construction phases. Both mega-projects used a traditional tool to estimate the project cost during the preplanning phase, prefeasibility phase and construction phase, and this use had resulted in several calculation errors appearing clearly after the basic design, detailed design and before and during construction phases for both projects. Moreover, both subsidiaries entirely depended on the main contractor to list and track project procurements during prefeasibility, feasibility and construction phases, and this had resulted in delay of some equipment delivery during the construction phase. The calculations for this mega project study were inaccurate and affected all phases of the project.

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Function analysis: - The both companies engineering team had lacked value management knowledge and experience, and hence the reason for being isolated from the value engineering workshops. - The value engineering workshops had become a hurdle instead of facilitating the project process at the early stages and this had occurred due to a lack of a dedicated value engineering team, a lack of defined the internal project management team roles and responsibilities during the design phase.

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5.9 Weaknesses of the Research

This research was an investigation of the process from the early phases of two complex

mega engineering projects for the public sector; the process involved many

stakeholders (partners, designers, contractors, subcontractors, suppliers, vendors and

people) over the course of eight years of preparation and implementation. The aim of

this study was to identify and explore mega-project factors of success and process,

keys to timeous completion in the field project engineering management and then seek

to document and apply a newly developed (hybrid) project management process

suitable for large scale mining engineering and construction projects. It is

acknowledged that there were several weaknesses in this study:

The relationship between governmental project, semi-governmental project and

international companies’ of project at early stages “preplanning” and “conception”

phases usually surrounded by discreet and confidentiality;

The possibility of lack of some data from interviewees arises due to the position

and confidentiality;

Data collection period had consumed cost and time of the interviewer due to the

difficulties to conduct personal interview with heads of the companies and senior

executives, which is usually fraught with ambiguity. Furthermore, at a number of

times and on several occasions, the interviewer had required to reschedule

appointments and interview with higher management, CEOs’ and executives due

to the busy senior executives schedules, and that wasted time and money;

At the time of collecting data for this research, one of the difficulties that had

limited the collection of abundant information was retirement some of the

executives, moved some of them to other companies or countries, bankruptcy of

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one contractor, and withdrawal of one of the leading international companies and

all of its staff from the project at the mid of preplanning phase.

5.10 Strength of the Research

Despite the weaknesses, this study had many strengths, notably:

Methodology which allowed the researcher to gather differing perspectives on the

megaproject preplanning phase and rest of the lifecycle phase.

Methodology allowed the research to gather ‘rich’ data.

The selection of interviewees enabled the researcher to gather differing

perspectives on the differing phases of the mega projects.

The methodology enabled comprehensive, in-depth analysis leading to the

development of a new hybrid framework.

Possibility to provide a holistic analysis of the issues in a sound of integrity.

The two mega projects data had collected for the same company for two different

subsidiaries; one for gold subsidiary and other for aluminum subsidiary including

the higher management at headquarters.

The data gathering obtained from different perspectives and departments and

included three CEOs, Four VPs, four directors, the rest are managers.

Data collection also included project partner interviewees.

Data collected from four different cities, two sites, for the same company.

The research covered pre-planning, concept and prefeasibility areas of mega-

projects that is rarely found anything like it in the literature.

Six executives out of fifteen answers an online survey, noting that writing

comments were used to enhance replies when complexity was explained.

Some of interview questions were necessarily triangulated namely asked thrice in

different ways to ensure answers were consistent and not contradict each other.

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The CEO’s of both subsidiaries had asked the interviewees especially the managers

to provide all forms of support for the researcher.


Preplanning phase is considered as the most important phase before embark the project

lifecycle phases and lack of expertise, knowledge and coordination of project

management teams and strategy at this phase could effect on the output of mega-

project, also imposing leading companies that have lack of local market knowledge by

stakeholders for politically motivated could affect project business decisions.

Moreover technical and business data collection for project and market such as

accurate calculation of the quantity and quality of the mineral resource effect on the

project either positively or negatively. Mega-project scope creep contributes to project

delay and occurs due to many reasons such as traditional procurement system and

evaluation process, type of contract, clauses, insurance, agreement, market change,

project teams, contractor, governor law, attribution rule, project location, weather and

quality of technology. Lack of a clearly defined stage gate process and understanding

lead to inaccurate input parameters, inadequate techniques being used, inaccurate

resources being planned for, incorrect cost estimation, tight or incorrect schedules and

planning, and design inadequacies, replacement of equipment due to rework, delay in

replacing items, increase material costs and delays project construction phase. Lack of

stage gate process clarity among stakeholders increase project direct and indirect costs,

increase iteration of activities or rework at each phase starting from preplanning phase

then it moves to design phases through to construction activities and project start-up.

Lack of understanding Stage-Gate Process increase conflict among departments, delay

contracting and tendering process, decrease the accuracy of each objective in the

prefeasibility and feasibility phases, increase the likelihood of change orders, decrease

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accuracy of cost estimation of every stage, lead to poor project start-up plan and

possible mechanical failure at the end of the construction phase. Unclear stage-gate

process mislead cost estimators and cause inadequate cost control starting from the

conception and prefeasibility phases and may affect capital cost of the project; poor

cost estimation reporting during preplanning phase and construction phase may lead

to a delay in identifying the cost overrun, thereby reducing the ability to put in place

any remedies. Unclear Stage-Gate Process and Gate keepers review could lead to

unidentified technical issues for project design at the prefeasibility phase. Unclear

understandings of Stage-Gate Process could lead to a focus only on short term project

delivery rather than on a long term business strategy, additional costs of attracting

personnel and delay in project start-up. Delay in making final decision on Stage-Gate

Process from Gate keepers could lead to delays in transitioning the project to the next

stage and could cause substantial problems in start-up of the project and change in

government regulations could hinder leadership decision making or Gate keeper

decision.

Inaccurate pre-planning phase of design phases could lead to serious impacts. The

length and completion of design phase caused change orders and delayed project

schedule, also lack of contribution of stakeholder teams during the design evaluation

process effect on project output. The design deficiencies for mining projects starts

from ore deposit calculation at the pre-planning phase and the miscalculations of ore

quality and quantity affected the mega-project cost estimation report and resulted in

design deficiency at prefeasibility and feasibility phases. Regarding contracting

strategy, implementing project design activities offshore and away from owner control

lead to design deficiency.

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CHAPTER SIX

6 STUDY OUTCOME: MEGA-PROJECT PREPLANNING

PHASE ROAD MAP

6.1 Introduction

A need exists within the medium-sized and small-sized ‘operation’ industry and

project management field to improve mega project process efficiency, effectiveness

and objectivity especially at the preplanning phase; it is also important that knowledge

can be shared in such a way that less experienced managers and engineers can

understand and hence take responsibility for work procedures.

The main outcome of this study is the development of a road map for project

management preplanning phase for mega-mining projects, specifically for the

construction of plants. This megaproject road map is divided into two vertical phases

which represent prefeasibility and feasibility phases of project definition, and each

vertical phase is divided into horizontal hybrid sub-stages, and each horizontal hybrid

sub-stage contains two gate-keepers for the decision maker to review, assess and

approve activities and tasks. Before concluding this thesis and presenting

recommendations (in chapter 7) information is the benefits, workflow symbols and

activities embodied in this newly developed roadmap. The benefits of the megaproject

road map developed following the findings of this study (see Figure 6.7) are now

presented:

The roadmap will boost understanding of the mega-project preplanning process

phase in the fields of industry and academia;

The enhanced understandings will lead to shortened preparation time for the

implementation phase of a mega project; specifically tasks at each stage should be

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finished in a shorter time with high quality and on budget; change orders and scope

of works will be minimized.

6.2 Megaproject Procedure Starting from Project Development Phase

This section explains, firstly, the mega-project task and activity steps at the project

preplanning phase as shown in Table 6.1 and then secondly step by step road map

process starting from defining the roadmap icon, vertical process and horizontal

process for both business and work processes. Finally, the Megaproject preplanning

road map which is divided into two stages and each stage is divided into different sub-

stages; the first stage represents the business process for project development

(prefeasibility) and is divided into sub-stages, and the second stage represents

execution of preplanning work process (feasibility) and is also divided into sub-stages.

6.3 Mega-Project Preplanning Process Activities and Tasks

Table 6.1 Mega-project preparation and associated tasks and activities at the preplanning phase

Mega-project preplanning activities and tasks:

1- Mega-project data & information.

2- Opportunity and needs.

3- Positive and negative impacts.

4- Mega-project benefits:

Order of Magnitude Estimates (OOM).

Earn value (EV).

Internal Rate of Return (IRR).

5- Technology strategy.

6- Business strategy: Business development.

Review business potential, risk and opportunity.

Investment review.

Resolution for outstanding issues.

Negotiation of funding issues.

Public notification.

Board review and approval procedures.

Commitments.

Project supervision and tracking.

Project evaluation process.

7- Communication and sharing of knowledge and ideas.

8- Documentation management, tools and control:

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Form.

Checklist.

Chart.

Drawings and design.

Risk management.

Improving practices.

Action plan.

Software and communication.

Economic value added calculation.

Conceptual engineering.

Prefeasibility package.

Basic engineering.

Feasibility packages.

Request to tender.

Constructability templates.

Procurement templates.

Logistics templates.

Operation and maintenance template.

Project execution plan.

Detailed engineering.

Commissioning plan.

Request for service.

Certifications.

The care, custody, and control of the site or battery limits (CCC).

Agreements and partnership.

Official documents.

9- Project stakeholders:

Project team members’ integration.

Define the external stakeholders and requirements.

Define permits requirements.

Communication plan.

Project fund.

Community development.

Environmental issues.

Well-being and benefits for all stakeholders.

10- Project scope.

11- Project key milestone.

12- Project options and alternatives.

13- Business analysis (EVA and IRR).

14- Economic analysis.

15- Capital estimation.

16- Risk management.

Environment, health and safety risk: identification, preliminary

analysis, defined, control strategy for construction, operation and

process.

Environmental issues: identify issues, examine and control.

ESH risk management strategies and control.

Climate change: identify issues, examine significant emissions,

control emissions and calculate cost.

Transfer residual risk to operation and maintenance.

230

Business risk: identification of high level risk strategies and

solutions.

Tendering risk and supplier risk for major and

small/miscellaneous items.

Project risk: identify show stoppers and quality control plan.

Engineering and technical risk: identify standard, legislation and

statutory requirements.

Operational risk: identify show stoppers and control plan.

Energy risk: review options of lifecycle cost.

Natural resources management: identify resources issue and

examination of usage and conservation.

Community development: identify issues and communicate issues

and cost to stakeholders.

Wellbeing: identify, define and communicate direct and indirect

benefits for all stakeholders.

Industry and market shifts: identify potential market shift,

consumer preference issues and technology shift.

Life cycle product stewardship: identify potential materials,

process, recovery, and despoil issues and cost.

17- Prefeasibility study plan.

18- Conceptual engineering packages.

19- Engineering solution:

Identify requirements.

Identify alternatives.

Identify site location and suitability (investigation and

inspections).

Identify hazardous area.

20- Technical solutions:

A- Utility and process:

Project process and options.

Process test.

Process flow diagram and mass balance.

Piping and instrumentation control diagram.

Functional specification.

B- Mechanical and Piping:

Work breakdown structure and scope of work.

General arrangement sketches and drawings.

Detail drawings for major equipment.

Sketch and drawings for piping plan and elevations.

Piping isometrics.

Tie-in lists.

Material take off: quantities, estimation and budget.

Major equipment list, sizing and data.

Pipe flow calculation for major equipment.

Minor equipment list, sizing and data.

Equipment specifications.

Signage requirements.

C- Civil and structure:


231

Civil engineering guidelines sketches and drawings for major

equipment.

Calculation of foundation sizing and slab thickness.

Calculation of mainframe dimensions and major member sizes.

Major equipment structural layout guideline: sketches and

drawings

Structural specific details.

Material takeoff: quantity and order magnitude estimate.

Geotechnical report and major civil works.

Feedback and survey for board members.

D- Electrical:

Functional specification: draft and final.

Signal line diagrams.

Major feeder lines sketches and drawings.

Basic engineering for switchboard, MV/LV transformer

substations and motor control center (MCC).

Equipment lists & sizing.

Motor and power lists.

Power requirements.

Sketches and layout drawings of substations, MCC, cable ladders,

Distribution box and HV.

Detail drawings.

Typical schematics.

Material takeoff: quantities and order of magnitude estimate.

Cable tray MTO and cable schedule.

Maximum demand, load centers and cable sizing calculations.

Equipment protection settings: cable fault level selections and

earth fault Loop for major circuits and switchboards.

Specifications.

E- Instrumentation and control:


Functional specification: draft and final.

Major instruments list: data and selection.

Instrument master list in accordance with piping and

instrumentation diagram, and piping/instrumentation control

diagram.

The size of control system required by project or I/O list.

Specific details drawings.

Cable block diagram.

Material takeoff: quantity and order of magnitude estimate.

21- Procurement and logistics.

22- Capital estimate:

Equipment supply: budget quotation with allowances.

Major equipment supply.

Purchasing specifications and quotations.

Scaffolding.

Painting.

Spares: critical, commissioning and capital spares list.

Commercial conditions: general procurement, subcontracting

strategy and contract negotiation.

232

Commodities: data and budget quotations.

Change management and training requirements.

Contingency allowance.

Schedule: preliminary project schedule, critical milestones,

preliminary WBS and detail ECM schedule.

23- Constructability:

Construction methodology and management plan.

Work packages for major work and capital estimate.

Commissioning and start up plan.

Contractibility detailed review with stakeholders and all

contractors for capital estimate.

24- Operability and maintainability.

25- Basic/detailed engineering package.

26- Drawings and scope of work.

27- Procurement packages.

28- Team and training.

29- Functional requirement specification.

Table 6.2 shows the icons used to demonstrate the workflow process for megaproject

roadmap.

Table 6.2: Roadmap workflow process icons

Beginning and end of sub-stage

Task or activity

Assessment and review previous tasks and activates

6.3.1 The mega-project roadmap

The roadmap developed from the findings of this study be adopted (see Figure 6.1).

Specifically, it is recommended that megaproject process at the preplanning phase be

divided into two vertical phases (Figure 6.1), and each vertical phase divided into a

horizontal stages which represents pre-feasibility and feasibility (Figure 6.2).

233

Figure 6.1: Two megaproject vertical phases (Hybrid stage-gate process)

Figure 6.2: Horizontal stages for pre-feasibility and feasibility phases

6.3.2 First vertical phase and first stage

The first phase of the megaproject preplanning phase is a preliminary detailed metric

study according to international standards for the first stage of the megaproject

business development, the pre-feasibility study (Figure 6.3). This phase assesses

business, technology, economy, market and industry and if this phase is feasible

Megaproject

Megaproject

Development

Business

Processes

First

Stage

Pre-feasibility analysis & associated economic &

technologic studies

Megaproject

Execution

Work

Processes

Second

Stage

Fasibility analysis & associated economic & technologic studies

Beginning of

preplanning phase

Hirining technical

Leadership

Raw material availability

Utility & infrastructure avilability

Geology & mining Data

Production, price,

partnership & market forecast

Logistics & permits

requirement

Preliminary process options

assessment

Hiring operation &

support teams

Preliminary assessment

idea of alternatives

Potential technology &

long lead items

Potential negative &

positive impacts

Project definition,

scope, data & solution

Identify opportunity

& need

Scope of Environment,

health and safetyPreliminary

business & economic analysis

OOM,EVA,IRRFinancial

study & capital

estimation 1

Preliminary project

stakeholders

Value Improvemen

t Practice checklist 1

Project critical Key milestones

Risk management

study 1

Stage gate review 1

Quantify project

justification (cost &

benifits)

Project Flow Diagram

Financial study & capital

estimation 2

risk management

study 2

Conceptual engineering

package developed

Action plan for definitive

feasibility study

Applicable Value

improvement practice

Stage gate review 2

End of preplanning & pre-feasibility phase

Beginning of

feasibility phase

Mega-project definition

Best solution for engineering

details

Mega-project specification

Logistics & procurement

Total constructability or buildability

review

Operability & maintainability

Develop basic engineering

package

Complete business & economic analysis EVA,IRR

Risk management

study 3

Value Improvement

Practice checklist 2


estimation 3

Stage

gate review

3

Update project scope

Final feasibility study

End of feasibility study &

beginning of

execution phase

Collecting information for

construction phase


operation & maintenance

Completing detailed

engineering

Completing financial

specification

Risk management

study 4

Value Improvement


Final Design test or

qualification test

stage

gate review

4

End of project

definition

234

economically and technically then a megaproject can move to the next phase which is

the feasibility phase execution phase.

Figure 6.3: First vertical phase and first stage of project definition

6.3.3 Stages of prefeasibility phase

In phase one, stage one (Business process phase), the following stages recommend to

be followed as in Figure 6.4:

Figure 6.4: Stages of prefeasibility phase (Business process phase)

Megaproject

Megaproject

Development

Business

Processes

First

Stage

Pre-feasibility analysis & associated Economic & technologic studies

Beginning of

preplanning phase

Hirining technical

Leadership


Utility & infrastructure

avilability


Production, price,

partnership & market forecast

Logistics & permits

requirement


assessment

Hiring operation & support teams

Preliminary assessment idea of alternatives

Potential technology &

long lead items

Potential negative &

positive impacts

Project definition,

scope, data & solution

Identify opportunity &

need


health and safety

Preliminary business &

economic analysis OOM,EVA,IRR


estimation 1

Preliminary project

stakeholders

Value Improvement


Project critical Key milestones

Risk management

study 1

Stage gate

review 1

Quantify project justification

(cost & benifits)



estimation 2

risk management

study 2


package developed

Action plan for definitive

feasibility study

Applicable Value

improvement practice

Stage gate

review 2

End of preplanning

& pre-feasibility

phase

235

6.3.4 The business processes

The business process phase (Pre-feasibility study) and the economic and technological

associated studies include the following stages:

1- Beginning of preplanning phase (scratch project preplanning).

2- Hire technical leadership staff. This should be staff with specialized mining

experience.

3- Assess preliminary raw material availability and, in order to do this accurately,

a user friendly mining software program needs to be used and current best

available mining software programs; this would require budget and a training

program e.g. Maptek Vulcan, Leapfrog 3D and GEOVIA Superpac

(Radulescu and Radulescu 2012).

4- Assess utility and infrastructure availability. Water and the utilities for the

project location must be considered accurately from the pre-planning stage

(owner must collect his own data rather than relying on data from others) in

order to extract minerals and obtain a loan for the projects; electricity and

roads, too, must be considered.

5- Collect geology and mining data. This collection, too, should be done in-house

rather than from external consultants in order to ensure accuracy of

information.

6- Forecast mineral production, mineral world prices, world market and possible

project partnership.

7- Study and prepare project logistics and documentation for project site permits.

8- Assess preliminary process options.

9- Hire support project teams, operation, and maintenance.

10- Assess preliminary idea and alternatives.

236

11- Determine most appropriate potential technology and long lead equipment

which need time for design and fabrication such as heat exchangers, turbines

and compressors.

12- Assess the potential negative and positive impacts.

13- Define project scope and assess data and solutions.

14- Determine alternative solutions.

15- Identify opportunity and need.

16- Determine scope of environment, health and safety.

17- Conduct a preliminary business and economic analysis including OOM, EVA

and IRR.

18- Carry out a first stage financial study and capital estimation (first stage).

19- Determine preliminary project stakeholders.

20- Develop a first stage value improvement practice checklist (VIP1).

21- Develop project critical key milestones.

22- Conduct a first stage risk management study (RM1).

23- Review and assess the First Stage Gate process (22 points above).

24- Quantify project justification (cost and benefits).

25- Develop project flow diagram (PFD).

26- Carry out a second stage financial study and capital estimation (second stage).

27- Conduct a second stage risk management study (RM2).

28- Develop a conceptual engineering package.

29- Prepare an action plan for definitive feasibility study.

30- Prepare applicable value improvement practice (VIP2).

31- Review and assess the Second Stage Gate process (24-30 points above).

32- End of pre-feasibility phase.

237

6.3.5 Second vertical phase and second stage

The second phase of the megaproject preplanning phase is a detailed metric study for

the second stage of the megaproject work processes to determine whether the

megaproject can make a profit before embarking on any financial commitment i.e. a

feasibility study is carried out (Figure 6.5).

Figure 6.5: Second vertical phase and second stage of project definition

Megaproject

Megaproject

Execution

Work

Processes

Second

Stage

Feasibility analysis & associated Economic & technological studies

238

6.3.6 Stages of feasibility phase

In phase two, stage two, the following stages recommended to be followed (Figure

6.6):

Figure 6.6: Stages of feasibility phase

6.3.7 The work processes

The feasibility study and economic and technological analysis and associated studies

include the following stages:

1- Beginning of feasibility phase.

2- Define Megaproject.

3- Identify the best solution for engineering details.

4- Prepare megaproject specification.

5- Complete logistics and procurement process.

6- Review total constructability or buildability process.

7- Review operability and maintainability.

8- Develop basic engineering package.

Beginning of feasibility

phase

Mega-project definition


details

Mega-project specification


Total constructability or buildability

review

Operability & maintainability

Develop basic engineering

package

Complete business &

economic analysis EVA,IRR

Risk management study 3

Value Improvement


Financial study & capital estimation

3

Stage

gate review 3


Final feasibility study

End of feasibility study & beginning of

execution phase


construction phase



Completing detailed

engineering

Completing financial

specification

Risk management study 4

Value Improvement


Final design test or qualification

test

stage

gate review 4

End of project

definition

239

9- Complete business and economic analysis EVA and IRR.

10- Conduct the third stage of risk management study (RM3).

11- Develop the second stage of the value improvement practice checklist (VIP2).

12- Carry out a third stage of the financial study and capital estimation (third stage).

13- Review and assess the Third stage gate process (1-12 points above).

14- Update project scope.

15- Complete feasibility study.

16- End of feasibility study and beginning of execution phase.

17- Collect information for construction phase.

18- Collect information for operation and maintenance.

19- Complete detailed engineering.

20- Complete financial specification.

21- Conduct a fourth stage of the risk management study (RM4).

22- Develop a third stage of the value improvement practice checklist (VIP3).

23- Verify and test the credibility of the overall design and process (qualification test).

24- Review and assess the Fourth Stage Gate Process (17-23 points above).

25- End of project definition.

6.4 Roadmap for Mega project development process (Preplanning phase)

The outcome of this research study was the development of a mega-project road map

and hybrid stage-gate process for future preplanning phases (Figure 6.7).

240

Figure 6.7: Roadmap for Mega project development process (Preplanning phase)

Megaproject

Development

Megaproject

Execution

Business

Processes

Work

Processes

First

Stage

Second

Stage

Pre-feasibility analysis

& associated economic & technological studies

Feasibility analysis

& associated economic & technological studies

Beginning of phase

Potential negative & positive impacts

Project definition, scope, data & solution



estimation 2

Hiring technical leadership & management

Potential technology & long lead items

Identify opportunity &

need

Quantify project justification (cost & benefits)

Risk management

study 2


Preliminary assessment ideaof alternatives


health & safety

Stage Gate review1


package developed

Utility & infrastructure

availability

Hiring operation & support teams

Preliminary business &

economic analysis OOM, EVA, IRR

Risk management

study 1

Action plan for definitive feasibility

study



assessment


estimation 1 Project critical key milestones

Applicable value improvement practice

Production price, market & partnership

forecast

Logistics & permits requirement

Preliminary project

stakeholders

Value Improvement

Practice checklist1

Stage Gate review2 End of preplanning

& pre-feasibility phase

Beginning of feasibility phase


estimation 3 Stage Gate review3

Stage Gate review4

End of project definition

Mega-project

Value Improvement



Final Design test or qualification test


details

Risk management

study 3 Final feasibility study

Value Improvement


specification

Complete business &

economic analysis EVA, IRR

End of feasibility study & beginning of

execution phase

Risk management

study 4


Develop basic engineering package


construction phase

Completing financial specification

Total construability or buildability

review

Operability & Maintainability



Completing detailed engineering

241

CHAPTER SEVEN

7 CONCLUSION AND RECOMMENDATIONS

7.1 Conclusions

The research goal of this study was to examine and evaluate the pre-planning process

management phase of two mega-projects in an ‘operation’ company in Saudi Arabia.

Primary research was conducted in the form of case studies incorporating semi

structured interviews with CEOs, VPs, executives and higher management within this

Saudi ‘operation’ mining company and two subsidiaries. This proved to be appropriate

to understand and address the complexities of the mega-project process at the

preplanning phase of these megaprojects as the methodology allowed the researcher

to collect valuable insights from a range of personnel involved in the mega-projects.

These findings were then used to develop a mega-project roadmap and process. The

key findings of this research were as follows:

1- Lack of mining expertise and knowledge and lack of coordination of project

management teams particularly at the preplanning phase affected the outcomes of

the mega-projects, e.g. mechanical failures. It was also found that shareholders had

imposed the hiring of the main contracting companies even though they lacked

local market knowledge. Moreover the project lifecycle process was hindered by

inaccurate calculations of the quantity and quality of the mineral resources at the

preplanning phase.

2- Mega-project scope change and change orders contributed to project delay and

occurred for many reasons: inaccurate data collection for mineral resources;

traditional procurement system which allowed conflict of interest in the evaluation

process; contracts used allowed control by the main contractors rather than the

242

owner; time lapses between pre-planning and execution meant there were market

changes; lack of specialized technical personnel in the project team at the pre-

planning phase; lack of cooperation from governmental authorities; lengthy time

to receive licenses to manage the logistics related to the location; and lack of

experience of contractor personnel (even though they were ‘expert’) with advanced

technology.

3- Lack of a clearly defined stage gate process led to inaccurate input parameters;

inadequate techniques being used; inaccurate resources being planned for;

incorrect estimation; tight or incorrect schedules and planning; design

inadequacies; replacement of equipment due to rework; delay in replacing items;

increased material costs and delayed project construction phase. Lack of stage gate

process clarity among stakeholders increased the project’s direct and indirect costs

and increased iteration of rework at each phase starting from the preplanning phase

through the design phases to construction activities and project start-up. Lack of

understanding of the stage-gate process increased conflict among departments;

delayed the contracting and tendering process; decreased the accuracy of each

objective in the prefeasibility and feasibility phases, increased the likelihood of

change orders; decreased the accuracy of cost estimation of every stage; led to a

poorly developed project start-up plan and mechanical failure at the end of the

construction phase.

Unclear stage-gate process, i.e. the data provided, misled the cost estimators and

project execution team and caused inadequate cost control starting from the

prefeasibility phase and increased capital cost of the project as extra loans had to be

applied for; the poor cost estimation led to a delay in identifying the cost overrun,

thereby reducing the ability to put in place any strategies. This led to technical issues

243

being unidentified for the project design at the prefeasibility phase. This led, too, to a

focus only on short term project delivery rather than on a long term business strategy.

Additional costs for attracting personnel were incurred; late government permits and

licenses led to delays at different stages of the project. All these reasons led to delayed

project start-up. Delays in making final decisions led to delays in transitioning the

project to the next stage and caused substantial problems at the start-up of the mega-

projects.

4- The inaccurate pre-planning phase of the design phases led to serious impacts. The

length and completion of the design phase caused change orders and delayed the

project schedule; in addition, as the views of some stakeholder teams had not been

considered during the design evaluation process, mechanical failure eventuated.

The design deficiencies began with the ore deposit calculation at the pre-planning

phase and the miscalculations of ore quality and quantity affected the mega-project

cost estimation report and resulted in design deficiencies at the prefeasibility and

feasibility phases as well as poor start-up. Implementing the project design

activities offshore away from the owner’s supervision led also to design

deficiencies.

These findings led to delays in the implementation of the mega-project and increased

mega-project costs. In order to overcome many of the previously highlighted

difficulties, the outcome of this research study was the development of a mega-project

road map and hybrid stage-gate process for future preplanning phases (Figure 6.9).

7.2 Recommendations Derived From This Research

The adoption of this roadmap for mega-projects at the preplanning phase will enable

shareholders, stakeholders including executives, managers, engineers, and academics

as well to make sound decisions based on a better understanding of the mega-project

244

preplanning process, activities and tasks. This will, in turn, lead to reduction of scope

changes, and timely deliverance of the project within budget.

In order to facilitate the adoption of the above stages, the following recommendations

are provided:

It is recommended that an induction program be implemented to explain and

discuss the roadmap stages;

For the best possible results for medium-sized operation companies and future

projects, and before embarking on the pre-planning phase the company leadership and

management needs an induction program to explain the roadmap steps to highlight the

importance of each stage generally and the possible outcome of each stage for

stakeholders and shareholders in order to avoid scope change during the project

lifecycle. Each head of technical and non-technical department within the organization

can explain the roadmap process and position and role of the department and

individuals on the roadmap in order to give each individual a general perception about

the mega-project, what and how the megaproject is to be conducted and implemented;

also this would show each individual his/her role during the course of the project, and

the potential positive and negative impacts of individuals and departments on the

project cost, time and process, and on other disciplines. In addition, the roadmap will

clarify what can be expected of individuals and departments. This will lead to greater

understanding among shareholders, stakeholders, departments and individuals and

may improve communication, enhance cooperation and enthusiasm among the project

parties and also may help to minimize the number of change orders and scope creep

possibility; this may also lead to mega-project time and budget savings at the early

stages and during the project lifecycle in general.

245

It is recommended that the owner ensure that all service providers (authorities)

have the ability to complete the delivery of all services during and after

implementation. This can be done by discussing all project main issues with project

site neighbors and preparing a project interface plan.

It is recommended that design company of the mega-project undertake the basic

design at the preplanning phase and then at the prefeasibility phase and the detailed

design at the feasibility phase in order to avoid design deficiencies. This will

enable continuous design work thus avoiding design deficiencies and consequent

changes.

It is recommended that, in order to ensure greater consistency between design

evaluation teams which include owner project management team, designer and

value management consultant, the designer and value engineering consultant must

provide the owner with ‘professional certificates’ proving knowledge in the fields

of value engineering ‘VE’, project management professional ‘PMP’, hazard and

operability study ‘HAZOP’, quantitative risk analysis ‘QsA’, safety integrity level

‘SIL’, enterprise architecture ‘EA’, ergonomics for handover and project quality

management before and after procurement. Moreover, the consulting firm must

provide the mega-project owner with formal documentation, plan and review of

the project plan, expected outcomes before starting consultation, especially for

design phases and value engineering reviews. Furthermore, value engineering must

include in predesign phase, basic design, detailed design, construction, operation

and maintenance.

It is recommended for public projects that the government establish an integrated

governmental body concerned with project management to facilitate and speed up

mega-project requirements and agreements among governmental authorities; this

246

will significantly reduce costs and time of mega-projects, and reduce investor team

efforts.

It is recommended that local standards be updated and that local contractors be

made aware of the updated standards.

It is recommended that the traditional procurement system and awarding process

based on low price needs to be reevaluated and updated in order to have a high

quality mega-project and to avoid uncertainty of procurement delivery, and also to

avoid nepotism and corruption in public projects.

247

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APPENDIX A

INTERVIEW QUESTIONS

QI What is your position?

QII How many years of work experience do you have?

QIII Which sector do you have the most experience in?

QIV What is your company affiliation?

QV Are you client or partner?

QIV Is your company public or privet?

Q1 What is the capital investment of your mega-engineering projects?

Q2 What is your company type?

Q3 Did the Mega project have a clear theoretical base?

Q4 Did the Mega project have a clear professional image?

Q5 How do you define the Mega project?

Q6 Was the Mega-project driven by practice only?

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Q7 Which process did your company follow in the early stages of the project?

Q8 Types of mega-project contract at the early stages of the project?

Q9 Type of project delivery?

Q10 Had you ever faced difficulties to execute Megaprojects in the initiation phase?

Q11 Had you ever faced difficulties during detailed design engineering?

Q12 How many times did you change the scope of work?

Q13 How do you evaluate the scope and the scope creep?

Q14 What is the percentage of allocation for front end engineering, design and planning from

overall capital cost?

Q15 What measures did mega- project at early stages need to take to improve project

performance and avoid project life cycle problem?

Q16 How did you rate internal lack of awareness or knowledge about this mining project?

Q17 How did you evaluate the support from parties with authorities?

Q18 How did you evaluate the importance of the technical understanding?

Q19 How did you evaluate the importance of the senior management commitment?

260

Q20 How did you evaluate the importance of time to execute the project?

Q21 How did you evaluate the importance of the training in organization?

Q22 What factors had affected the success of the projects?

Q23 How did you evaluate the communication among project stakeholders?

Q24 How did you stop project creep from the beginning of the initiation phase and planning

phase?

Q25 Did this project completely achieve the required objectives in the initiation and planning

phase?

Q26 How far were you satisfied with implementing projects?

Q27 What did you think the main on-going costs are for any given project?

Q28 How closely did the project adhere to schedule duration of design, planning study in early

stages?

Q29 Do you think the funding mechanism for the newly constructed mega project was effective?

Q30 Did your organization use tools at the early stages before of project planning? If so, what

were they?

Q31 What were the main barriers that hinder software tools in mega-projects?

261

Q32 How could these impediments be overcome?

Q33 Did you use building information modelling in the concept/initiation/planning phase?

Q34 What were the reasons behind the limited use of software tools during early stages?

Q35 How did you evaluate the cost of megaproject software?

Q36 What were the weaknesses and strengths of the software tools approach in the initiation

phase?

Q37 How did the external team influence software tools use in this project?

Q38 Did you use value management in your organization? If so, how did you use it?

Q39 Did your organization use value management during the concept stage of project life cycle?

Q40 Did you use value management for design stage?

Q41 Did you spend money on value management, software tools during the project early stages?

Was it cost effective?

Q42 Did your company utilize any economic evaluation techniques as part of the decision

process?

Q43 How did you rate the flexibility in contractual provisions?

262

Q44 How did your organization make decisions on building a new project?

Q45 What was the normal procedure for contract awards in your firm with regards to existing

construction project?

Q46 What were the main factors (criteria) that play a major role in awarding a contract for a

new construction project?

Q47 What were the main factors (criteria) that play a major role in awarding of a contract for

maintenance of an existing construction project?

Q48 Was the current contract award mechanism in your company effective?

Q49 How can the contractor inputs be included in the design?

Q50 How did you evaluate the traditional procurement system (Design-Bid-Build)?

Q51 How can any conflict of interests among project stakeholders be solved?

Q52 How did you assess the risk in your projects?

Q53 What kind of procurement systems tools did you use? How?

Q54 What were the benefits and drawbacks of implementing technology within the current

procurement system? How can it be improved?

Q55 What type of contracts was used for the megaproject?

263

Q56 What was the normal procedure for the contract award with regards to a new construction

project?

Q57 How important did you rate time requirement?

Q58 Could you evaluate type of accuracy and reliability of cost estimation?

Q59 Could you evaluate the type of cost estimation technique used?

Q60 Could you evaluate the quality assessment system?

Q61 Could you evaluate availability and supplies of resources?

Q62 Could you evaluate the government regulation?

Q63 Could you evaluate political situation?

Q64 Could you evaluate the number of competitor on the market?

Q65 Could you evaluate culture impact?

Q66 Could you rate weather condition?

Q67 Could you evaluate the project location?

Q68 Could you evaluate the project duration?

264

Q69 Who was your project team leader?

Q70 Who, generally, was responsible for carrying out the project during conceptual/initiation

and planning phases?

Q71 Who, generally, was responsible for conducting design changes in the initiation phase and

prefeasibility phase?

Q72 What size was your project management team?

Q73 Could you evaluate the number of team members?

Q74 Did you employ an external team to carry out the project prefeasibility study and

planning? If so, why?

Q75 How did you evaluate the importance of the teamwork?

Q76 How was the design team briefed?

Q77 What was the appropriate team to conduct design change? Why?

Q78 How did you evaluate the cultural and operating factors among the various regions?

Q79 What methods did you use to carry out the project during the conceptual and prefeasibility

phases?

Q80 What percentage of time did you spend on function analysis during the early stages?

265

Q81 What did you do for the cases for which you did not use function analysis?

Q82 How did you select functions for the project?

Q83 Which function analysis techniques did you use?

Q84 Which function analysis technique did you use in the evaluation stage to compare

alternatives?

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